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Hi Investor, Thanks for the linked article. Many private/public pension funds are traveling the road of more monies into hedge funds. Personally, I think they are messing with the danger zone. 'Course, many of this pension funds are trying to play catchup with the portfolio values for funding. The managers of many publlic pension fund committees knock down some pretty decent salaries for their "knowledge". I would not be at all surprised that the MFO gang could come up with a 10 holdings, cheap e.r., fund of funds and give the big kids a run for their returns. Take care, Catch
Thank you so very much for your reference to the article that reported the practical difficulties of implementing the Yale endowment model.
That model, as executed by David Swensen, delivered the goods for Yale; its transferability to other investment agencies is dubious given the failed track record of other portfolio management wannabes. Apparently, there is only one David Swensen.
You may recall that Swensen, in his book “Unconventional Success”, initially attempted to outline a proximity to the Yale model for private investors. While writing that book he recognized that his methods could not be reasonably executed by these investors, mostly because of resource, contact, and time limitations. He abandoned his original concept for the book, and ultimately concluded that an array of Index mutual funds were the most promising approach for individual investors.
Here is a Link to a website that purportedly reproduces Swensen’s asset allocation portfolio for the private investor:
I can not verify the model portfolio’s authenticity. It does seem both plausible and reasonable.
I completely concur with Swensen’s summary statement that was included in the article that you referenced: “No middle ground exists. Low-cost passive strategies, as outlined in Unconventional Success, suit an overwhelming number of individual and institutional investors without the time, resources, and ability to make high quality active management decisions.”
Swensen’s concept for a portfolio managed by a non-professional is also summarized in Paul Farrell’s Lazy Man listing that is reported on the WSJ’s MarketWatch website. Here is a Link to that useful site:
The Lazy Man array gives you 8 alternate portfolios designed by well-recognized investment wizards. The choice is yours. Performance updates are current and include data for the most recent 10-year period. It is a guide to market-like returns, and is a trustworthy resource.
I did not compare the portfolio given in the Lazy Man listing with that provide in my first Link. I am definitely a lazy man.
The portfolios on both sides are similar in allocation and type of assets. Percentages and types of assets are correct (pg 84 of Unconventional Success, 2005 edition). The major difference is that MW portfolio uses Long Term treasury bonds vs. other portfolio uses short/intermediate term bonds in its implementation of US. Treasury Bonds. This could at least make significant difference at times.
Comments
Thanks for the linked article. Many private/public pension funds are traveling the road of more monies into hedge funds. Personally, I think they are messing with the danger zone. 'Course, many of this pension funds are trying to play catchup with the portfolio values for funding.
The managers of many publlic pension fund committees knock down some pretty decent salaries for their "knowledge".
I would not be at all surprised that the MFO gang could come up with a 10 holdings, cheap e.r., fund of funds and give the big kids a run for their returns.
Take care,
Catch
Thank you so very much for your reference to the article that reported the practical difficulties of implementing the Yale endowment model.
That model, as executed by David Swensen, delivered the goods for Yale; its transferability to other investment agencies is dubious given the failed track record of other portfolio management wannabes. Apparently, there is only one David Swensen.
You may recall that Swensen, in his book “Unconventional Success”, initially attempted to outline a proximity to the Yale model for private investors. While writing that book he recognized that his methods could not be reasonably executed by these investors, mostly because of resource, contact, and time limitations. He abandoned his original concept for the book, and ultimately concluded that an array of Index mutual funds were the most promising approach for individual investors.
Here is a Link to a website that purportedly reproduces Swensen’s asset allocation portfolio for the private investor:
http://www.mymoneyblog.com/model-portfolio-7-unconventional-success-by-david-swensen.html
I can not verify the model portfolio’s authenticity. It does seem both plausible and reasonable.
I completely concur with Swensen’s summary statement that was included in the article that you referenced: “No middle ground exists. Low-cost passive strategies, as outlined in Unconventional Success, suit an overwhelming number of individual and institutional investors without the time, resources, and ability to make high quality active management decisions.”
Swensen’s concept for a portfolio managed by a non-professional is also summarized in Paul Farrell’s Lazy Man listing that is reported on the WSJ’s MarketWatch website. Here is a Link to that useful site:
http://www.marketwatch.com/lazyportfolio
The Lazy Man array gives you 8 alternate portfolios designed by well-recognized investment wizards. The choice is yours. Performance updates are current and include data for the most recent 10-year period. It is a guide to market-like returns, and is a trustworthy resource.
I did not compare the portfolio given in the Lazy Man listing with that provide in my first Link. I am definitely a lazy man.
Best Wishes.