Unconventional Success: A Fundamental Approach to Personal Investment

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Simon and Schuster, Aug 9, 2005 - Business & Economics - 416 pages
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.

In Unconventional Success, investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual fund industry consistently fails the average investor. From excessive management fees to the frequent "churning" of portfolios, the relentless pursuit of profits by mutual fund management companies harms individual clients. Perhaps most destructive of all are the hidden schemes that limit investor choice and reduce returns, including "pay-to-play" product-placement fees, stale-price trading scams, soft-dollar kickbacks, and 12b-1 distribution charges.

Even if investors manage to emerge unscathed from an encounter with the profit-seeking mutual fund industry, individuals face the likelihood of self-inflicted pain. The common practice of selling losers and buying winners (and doing both too often) damages portfolio returns and increases tax liabilities, delivering a one-two punch to investor aspirations.

In short: Nearly insurmountable hurdles confront ordinary investors.

Swensen's solution? A contrarian investment alternative that promotes well-diversified, equity-oriented, "market-mimicking" portfolios that reward investors who exhibit the courage to stay the course. Swensen suggests implementing his nonconformist proposal with investor-friendly, not-for-profit investment companies such as Vanguard and TIAA-CREF. By avoiding actively managed funds and employing client-oriented mutual fund managers, investors create the preconditions for investment success.

Bottom line? Unconventional Success provides the guidance and financial know-how for improving the personal investor's financial future.

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Great content, writing style not so much. Still believe worth the effort to look past academic prose.
Though Swensen is a big proponent of index investing, he does outline situations where he
thinks active management is a good alternative. Particularly where the managers are 1) Eating their own cooking 2) not restrained from buying any business they like 3) charge low fees 4) concentrate on their best ideas and don't track an index 5) Don't trade too much
We hear you! This is a blueprint for the setup of www.steadyhand.com.

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Page 1 - Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.
Page 17 - From a strictly financial perspective, diversification improves portfolio characteristics by allowing investors to achieve higher returns for a given level of risk (or lower risk for a given level of returns). Generations of economics students who learned that "there ain't no such thing as a free lunch...
Page 17 - Generations of economics students who learned that "there ain't no such thing as a free lunch" may be surprised to discover that Nobel laureate Harry Markowitz called diversification one of the economic world's rare "free lunches.

About the author (2005)

David F. Swensen (1954–2021) was the chief investment officer of Yale University and the bestselling author of Pioneering Portfolio Management. He served on the boards of TIAA, The Brookings Institution, Carnegie Institution, and Hopkins School. At Yale, where he produced an unparalleled two-decade investment record of 16.1 percent-per-annum returns, he taught economics classes at Yale College and finance classes at Yale's School of Management.

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