Posts filed under “Asset Allocation”
For a long time, the fund managers at Yale’s endowment were the industry’s gold standard. Inevitably, as in so many things Ivy, this was noticed by rival Harvard. The so-called Yale Model, developed by David Swensen and his colleague Dean Takahashi, was rich with alternative investments, private equity, commodities and real estate and other items that weren’t plain vanilla stock and bond investments.
The success of the Yale Model led to lots of copycats. The problem was that other schools could duplicate the look, but not quite the feel of Yale’s endowment investments, but without Swensen’s unique talents. He even wrote a book explaining how to be like Yale’s endowment titled, “Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment.”
For a while, Harvard came close to matching Yale’s success. It had a worthy rival for Swensen in investment chief Jack Meyer. At one point, Harvard Management Co. was throwing off superior returns. Fortune observed that the “120 or so people who work there are masters of short-term trading, initiating as many as 250,000 transactions a year. Their bets have often focused on undervalued situations and arbitrage opportunities in global stock and bond markets.”
But as Fortune reported in 2005, Meyer was paid more than $7 million dollars a year — seven times what Swensen was making. Paying successful managers handsomely looked justifiable. But it ran up against certain notions of Ivy League decorum. The negative perception of a richly compensated managerial team led to the sort of touchy-feely academic posturing that most of us in the real world find silly. Offended by the high cost of this talented team of managers, the brain trust that is the Harvard professorial class, with encouragement from alumni, forced changes that ultimately worked to the detriment of the endowment — and the university as a whole.
Next month, myself and some staffers will be visiting a few clients and prospective clients in the Washington, D.C. area. Many of you are familiar with my investing philosophy, but this is an opportunity to have a more in depth and personal conversation. If you are interested in meeting with us, hearing our views on the…Read More
> My Sunday Washington Post Business Section column is out. As a follow up to our previous discussion of the World’s Greatest Trader®, this morning, we look at the Worlds Greatest (and Worst) Market Timer®. As we did last time out, we assumed magical powers for our theoretical trader, giving him the ability to bottom…Read More
Source: Novel Investor Have a look a the chart above (click on the chart for a larger interactive version). This chart ranks the past 15 years of returns for eight major asset classes (large-cap stocks, small-cap stocks, developed-market stocks, emerging-market stocks, real estate investment trusts, high-grade bonds, high-yield bonds and cash). We can divide…Read More
Source: BCA Today’s chart comes to us from Chen Zhao of the Bank Credit Analyst, who writes in a research report: The financial services industry have (sic) begun to feel the pinch of the fallout from low volatility and zero interest rates. The average return delivered by hedge funds has fallen sharply since the…Read More
Nice short list from Rick Ferri: There are other reasons to hire an adviser even if you’re an index believer. Here is a partial list: To put space between you and your investments so that you don’t make emotional decisions. To do detailed research on asset allocation or index funds because you would rather spend…Read More