You can get his book Unconventional Success: A Fundamental Approach to Personal Investment on Amazon here. His investing philosophy has been dubbed the "Swensen Approach" and is unique in that it stresses allocation of capital in Treasury inflation protection securities, government bonds, real estate funds, emerging market stocks, domestic stocks, and developing world international equities. united chinese press news around south pacific and new zealand news around south pacific and new zealand Swensen provides one such allocation as an example in his book Unconventional Success: A Fundamental Approach to Personal Investment: What you will notice about this allocation is that it is only 30% U.S. stocks and 30% U.S. bonds, with the remaining 40% spread out across international stocks and U.S. real estate. Here is the asset allocation for David Swensen’s Portfolio. Asset Allocation 30% Total Stock Market15% International Stocks5% Emerging Markets30% Intermediate Bonds¹20% REITs Notes Swensen specifically calls for 15% TIPS as part of the bond portion of the portfolio. NEW HAVEN — David Swensen, whose investment strategies brought Yale University’s endowment to a record $31 billion, has died. As global asset prices declined during the financial crisis of 2008, Swensen’s approach to investing was under attack. The information contained herein does not constitute the provision of investment advice. Led by Tobin’s ideas, he stressed asset allocation rather than stock picking, or attempts to time the market — beyond the mechanical market timing that … Despite this, Swensen does provide some clarity on what kinds of assets you should own. It's a High Risk portfolio and it can be replicated with 6 ETFs. It can be used by individual investors as well. In Unconventional Success, investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual-fund industry consistently fails the average investor. But unless you have $10,000,000 to buy a Picasso yourself, the barriers to this asset class have been too high...until now. Sadly, our time horizon can be much shorter than we think. “He was bold during a time when institutions still looked at investments from a simplified portfolio perspective, and he was a leader in making endowment management a meaningful career for many. And while owning these assets can be riskier in the short run, as Swensen has pointed out, in the long run it’s one of the best ways to build wealth. How could anyone hold so many volatile assets that could all fall at the same time? Swensen, who was the pioneer behind the “Yale model”, revolutionised how endowments and institutions invest their money by emphasising asset allocation and taking on more equity risk. If you are interested in getting periodic income, please refer to the David Swensen Yale Endowment Portfolio: Dividend Yield page. On asset allocation, equity exposure, and other lessons from one of the greatest investors of all time. The Swensen Portfolio divides the bulk of its asset allocation between US stocks and Intermediate bonds. By … For disclosure information please see here. David Swensen, a money manager who gave up a lucrative Wall Street career to oversee Yale University’s endowment and proceeded to revolutionize endowment investing, in the process making Yale’s the best-performing … The takeaway is that Swensen's candidate ETFs (or index funds) have a good mix that allow an asset allocation strategy to gain exposure in various market cycles, as … The higher asset volatility, the riskier it is, because the price movements are less predictable. Best High Risk Porftolios, ordered by 10Y annualized return. * ... Asset allocation is the tool that you use to determine the risk and return characteristics of your portfolio. You'll also receive an extensive curriculum (books, articles, papers, videos) in PDF form right away. If you want to learn more about Swensen’s approach to investing, I highly recommend this excellent talk he gave at Yale and his books Pioneering Portfolio Management and Unconventional Success. *See important information, For disclosure information please visit: https://ritholtzwealth.com/blog-disclosures/. What was the point of diversification if it didn’t save you when you needed it most? Within bonds, he splits it evenly at 15% between TIPS (Treasury Inflation-protected securities) and US Treasury Bonds. After watching a David Swensen lecture online some time ago courtesy of blogger Dividend Monk, I got thinking about my own asset allocation in more detail. 50% total bond market index, and 50% would be more diversified, and have a better expected return (yes, with slightly more risk, but if your stock allocation is 15% REIT and 10% emerging markets, you are no stranger to risk). Over the years, many pension-fund managers would mimic Yale Endowment’s asset allocation; most learned, to their regret, that Swensen’s greatest skill was manager selection. To put that into context, most managers don’t make to 10 years let alone 20 years. Volatility is a statistical measure showing how big price swings are in either direction. Swensen’s argument for more equities (and other risk assets) in your portfolio heavily influenced my thinking on how individual investors should build wealth. This is why Swensen recommends an increased exposure to equities for those with longer time horizons (i.e. The example he provides is of the Japanese investor who had most or all of their net worth in Japanese equities in the late 1980s. The David Swensen Portfolio – also called the David Swensen Lazy Portfolio – comes from portfolio manager David Swensen, who was the CIO at Yale University from 1985 until his death in May, 2021. Though future asset returns are unknowable, what we do know is that equities tend to outperform bonds, commodities, and cash in the long run. An investment of 1000$, since May 2011, now would be worth 2357.92$, with a total return of 135.79% (8.96% annualized). David Swensen Yale Endowment Portfolio - Historical returns and stats. Portfolio returns are calculated assuming: Price-Forecasting Models for ProShares UltraPro QQQ TQQQ Stock. Additionally, their study showed that, over the same period, art had almost no correlation to the stock market (0.01 correlation factor). What assets you own (and in what proportions) are going to be the primary determinant of your investment results, all else equal. An investment of 1000$, since January 2001, now would be worth 5189.25$, with a total return of 418.93% (8.43% annualized). More importantly, though this portfolio only has half the allocation to U.S. stocks as a 60/40 U.S. stock/bond portfolio, it still has returned 8.6% per year over the last decade. It's overwhelmingly important in terms of the results you achieve. The David Swensen Lazy Portfolio is exposed for 70% on the Stock Market. Any code I have related to this post can be found here with the same numbering: https://github.com/nmaggiulli/of-dollars-and-data. For a more complete view, find out the. David Swensen Yale Endowment Portfolio: annualized rolling and average returns, * Annualized rolling and average returns over full calendar month periods. A beloved teacher, he lectured for many years at Yale SOM and served as a David Swensen, Yale’s Chief Investment Officer and manager of the University’s endowment, discusses the tactics and tools that Yale and other endowments use to create long-term, positive investment returns. This lecture is a guest lecture by Professor David Swensen, Yale University’s Chief Investment Officer. While this isn’t as good as the 10.1% annual return of a 60/40 portfolio over the same time period, it’s impressive nonetheless. Every month you'll receive 3-4 book suggestions--chosen by hand from more than 1,000 books. As a result, Swensen concluded that the primary driver of long-term performance is asset allocation. Swensen solves the asset allocation problem I mentioned in the prior section by looking at what would have worked throughout history. Though Swensen taught us to invest as if we would live forever, unfortunately, his own life was cut short. View David Swensen Asset Allocation and Market Timing from ECON 252 at Yale University. While some investors will win when they select better stocks or time the market correctly, others will lose doing the same thing. The bestselling author of Pioneering Portfolio Management, the definitive template for institutional fund management, returns with a book that shows individual investors how to manage their financial assets. David Swensen ’80PhD, as seen through a window in Yale's Investment Office. Asset Allocation: Swensen advocates one strategy for individual investors and a different strategy for institutional investors. From the NY Times obituary:. This is the portfolio David Swensen (manager of the Yale endowment) recommends for individual investors in his book Unconventional Success. Swensen goes on to explain that this is true because security selection and market timing are negative sum games. It's … David Swensen has a phenomenal long-track record, averaging 13.9% per year in the 20 years to 2015. Masterworks allows you to invest in paintings by artists like Basquiat and Warhol at a fraction of the entry price. Last week, David Swensen, the famed investment manager and Chief Investment Officer at Yale, died at the age of 67 after a long battle with cancer. There is no right asset allocation, but there is an allocation that you are comfortable with and can stick with. Thank you for reading! David F. Swensen ’80 Ph.D., whose revolutionary approach to managing Yale’s endowment, warmth of spirit, and personal integrity made him one of the world’s most admired institutional investors and a beloved member of the Yale community, died May 5 in New Haven, after a long battle with cancer. The David Swensen Yale Endowment Portfolio is exposed for 70% on the … Guest Speaker-David Swensen Tuesday, February 12, 2008 11:45 PM Diversification, long holding period … Current David Swensen Yale Endowment Portfolio volatility is 14.88%. If you are interested in getting periodic income, please refer to the David Swensen Yale Endowment Portfolio: Dividend Yield page. “David Swensen was an extraordinary person,” said Jim Bailey, co-founder of Cambridge Associates, in a statement to affiliate publication Buyouts. David Swensen, who served as Yale’s chief investment officer for more than 35 years, died on May 5. Swenson’s bond allocation is good, but restricting it to just government bonds implies something about the rest of the bond market. If you liked this post, consider signing up for my newsletter. Unfortunately, Swensen discovered that only one of these three tools actually mattered for most investors. As he explained during a guest lecture at Yale: More than 90% of the variability in returns for institutional portfolios had to do with the asset allocation decision. VTI - Vanguard Total Stock Market: simulated historical serie, up to December 2001, VNQ - Vanguard Real Estate: simulated historical serie, up to December 2004, VEA - Vanguard FTSE Developed Markets: simulated historical serie, up to December 2007, EEM - iShares MSCI Emerging Markets: simulated historical serie, up to December 2003, TLT - iShares 20+ Year Treasury Bond: simulated historical serie, up to December 2002, TIP - iShares TIPS Bond: simulated historical serie, up to December 2003. ... 4 Investing Lessons from David Swensen . This is why I have emphasized income-producing assets as the core building block of your portfolio. If you need a deeper detail about rolling returns, please refer to the David Swensen Yale Endowment Portfolio: Rolling Returns page. He emphasizes the importance of asset allocation and diversification and the limited effects of market timing and security selection. However, if they had owned non-Japanese equities as well, they would have had a very different result. Last week, David Swensen, the famed investment manager and Chief Investment Officer at Yale, died at the age of 67 after a long battle with cancer. And though you aren’t an institution, the logic still applies. For this reason, below I have summarized four investing lessons we can use from Swensen to improve our investment results. 30.00% US Total Stock Market (VTI) 20.00% REITs (VNQ) 5.00% Emerging Markets (VWO) ... Yale’s asset allocation has contributed 1.9% per annum of outperformance and Yale’s superior manager selection contributed an additional 2.4% per annum. These days, the Swensen model is often reduced to an asset-allocation decision: hold alternatives. 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