Tag Archives: David Swensen

Sector Watch: Retail REITs

Real Estate Investment Trusts (REITs) are companies that own and, typically, manage real estate investments to generate income.  REITs may also invest in mortgage securities (these are called mortgage REITs or mREITs).  REITs may specialize in specific types of properties.  The Folio Investing Retail REIT Folio holds equal-weight allocations to the largest publicly-listed REITs that own and manage shopping centers, outlet malls, and urban retail property.  Retail stores lease space from the REITs and the leases are the primary source of income. Continue reading

Is Your Brain a Barrier to Smart Investing?

Guest blog by Daniel Solin, Mint.com.

The evidence showing that most individual investors significantly underperform the market is compelling. A study done by Dalbar, a leading financial services market research firm, found that, during the 20 years from 1991 through 2010, the average stock fund investor earned returns of only 3.83% per year, while the S&P 500 returned 9.14%.

The ramifications of this study are startling. It’s very easy to capture the returns of the market. All you have to do is purchase index funds that track the returns you are seeking to replicate. You will pay low transaction fees, but your returns should be pretty much in line with the indexes.

There is overwhelming support for buying Continue reading

Answering David Swensen’s Call to Arms

David Swensen has been called Yale’s “Money Guru”—and rightly so. As the head of Yale University’s highly successful $16 billion endowment, he has created an amazing performance record.  Over the last 10-years (through Yale’s 2010 fiscal year), for example, the endowment had an annualized return of 8.9% vs. 1.5% for a portfolio allocated 70% to U.S. equities and 30% to U.S. bonds.

Mr. Swensen is also the author of two highly influential books—Pioneering Portoflio Management: An Unconventional Approach to Institutional Investment (for Institutional Investors) and Unconventional Success: A Fundamental Approach to Personal Investment (geared toward individual investors)

By anyone’s standard, Mr. Swensen is one of the most credible voices on investing and portfolio management, which is why when he lambasted the mutual fund industry in a recent New York Times op-ed called, “The Mutual Fund Merry-Go Round,” I thought that his “call to arms” needed further discussion. Continue reading

Hedge Funds: The Emperor’s New Clothes?

Brett Arends recently wrote a piece for MarketWatch in which he expressed the opinion that hedge funds are a sucker’s bet.  He bases his argument on a fascinating  study called Higher Risk, Lower Returns: What Hedge Fund Investors Really Earn that was published in 2009.  The authors of the study, professors from Emory University and Harvard, came to the conclusion that hedge fund investors would have (on average) been better off buying an S&P500 Index fund. So, if hedge funds have performed as badly as this academic study suggests, why have assets invested in hedge funds skyrocketed over the past 20 years?  Continue reading

Measuring The Performance of David Swensen’s Lazy Portfolio

Lazy sunday...
(photo:Dan Queiroz)

Over at My Plan IQ they’ve been analyzing the performance of David Swensen’s model portfolio. It’s been successful over the long term, they conclude, but recently some weaknesses have begun to hurt its performance. Continue reading

Larry Swedroe on Passive Investing and Skill

One recent Sunday afternoon Larry Swedroe set off  a passionate debate on the Bogleheads board when he posted some thoughts about investing skill. Or more particularly its irrelevance.

Swedroe, an avowed proponent of passive investing, wanted to clarify his position. It’s not that investing skill can’t exist, he argued, it’s that if it does, the markets will, over time, erase that advantage. And, just as importantly, that  it’s impossible to predict where that skill will show itself.  We’re betting against the odds if we try to pick the winning investors (or fund managers). Continue reading