Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment
During his fourteen years as Yale's chief investment officer, David F. Swensen has transformed the management of the university's portfolio. Largely by focusing on nonconventional strategies, including a heavy allocation to private equity, Swensen has achieved an annualized return of 16.2 percent, which has propelled Yale's endowment into the top tier of institutional funds. Now, this acknowledged leader of fund managers draws on his experience and deep knowledge of the financial markets to provide a compendium of powerful investment strategies.
Swensen presents an overview of the investment world populated by institutional fund managers, pension fund fiduciaries, investment managers, and trustees of universities, museums, hospitals, and foundations. He offers penetrating insights from his experience managing Yale's endowment, ranging from broad issues of goals and investment philosophy to the strategic and tactical aspects of portfolio management. Swensen's exceptionally readable book addresses critical concepts such as handling risk, selecting investment advisers, and negotiating the opportunities and pitfalls in individual asset classes. Fundamental investment ideas are illustrated by real-world concrete examples, and each chapter contains strategies that any manager can put into action.
At a time when it is becoming increasingly difficult to cope with the relentless challenges provided by today's financial markets, Swensen's book is an indispensable roadmap for creating a successful investment program for every institutional fund manager. Any student of markets will benefit from Pioneering Portfolio Management.
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LibraryThing ReviewUser Review - LibraryThing
When describing the optimal approach to designing an investment portfolio, financial economists often begin by considering the problem faced by an infinite-lived investor. Of course, given that all individuals will eventually “expire,” that assumption is quite unrealistic for the vast majority of the investing public. This distinction is critical, however, to understanding what makes college endowment funds a unique class of investor: universities expect to survive forever and their spending needs remain relatively stable for long periods of time. As such, managers of endowment funds have the capacity to think very differently about financial risk-taking than virtually any other type of investor. Despite the advantages that having an infinite time horizon provides (e.g., the ability to commit more capital to illiquid asset classes), college portfolios have been remarkably slow to take advantage of those opportunities over the last two centuries. David Swensen, the legendary manager of Yale University endowment fund, changed all that in the mid-1980s. In Pioneering Portfolio Management, Swensen explains with clarity and considerable detail what this transformation from traditional “plain vanilla” investing to the use of modern portfolio management techniques entailed. The main innovations central to his approach to endowment management are: (1) diversify the portfolio into several asset classes, concentrating on equity investments, (2) invest in private markets (i.e., real estate, commodities, private equity) that offer increased long-term return potential per unit of risk, and (3) use external active managers for non-indexed investments. Much of the book is devoted to explaining and documenting the success of these strategies, which form the foundation of what has come to be called the “endowment model” (or Yale model) of investing. While insightful on virtually every page, this book is not written for the casual reader; it certainly is not intended as a “how to” manual for the novice investor. As other reviewers have noted, Swensen’s writing style can be somewhat less than scintillating on occasion and some of the chapters contain far more information than many readers will care to know. Nevertheless, those inside the money management profession hold him in the same regard as they do Warren Buffett and that is reason enough to spend some time considering his thoughts on how institutional assets should be invested.
Review: Pioneering Portfolio Management: An Unconventional Approach to Institutional InvestmentUser Review - Sean - Goodreads
This book lays out fundamentals of portfolio management from the perspective of one of the most successful and credible practitioners in the market: David Swensen of Yale's Endowment. Swensen ... Read full review
Unconventional Success: A Fundamental Approach to Personal Investment
David F. Swensen
Limited preview - 2005
Investment and Spending Goals
Traditional Asset Classes
Alternative Asset Classes