Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)

~ (Author) "This book provides readers with a window on the world of institutional funds management, drawing on my fourteen years of experience in managing Yale's endowment,..." (more)
Key Phrases: asset class characteristics, purchasing power preservation, active management opportunities, Wall Street, Common Fund, Morgan Stanley (more...)

Editorial Reviews

From Booklist

Swensen has been the chief investment officer for the past 14 years at Yale University, where he is responsible for managing and investing more than $6 billion of the university's endowment assets and investment funds. Realizing an annual return of more than 16 percent on his investments, Swensen has added more than $2 billion to Yale's coffers, and his consistent track record has attracted the notice of Wall Street portfolio managers. Here Swensen provides a brief history of endowment funds and explains the purpose of endowment accumulation and the goals for institutional portfolios. One of the strategies behind his success has been to diversify asset classes and move beyond a reliance on domestic marketable securities. He distinguishes between traditional and alternative asset classes, looks at performance evaluation issues and tools, and considers the investment decision-making process. Although its audience will be limited, this book is a necessary purchase for libraries with collections that include the topic of investment management. David Rouse
Copyright © American Library Association. All rights reserved

Review

Richard C. Levin F.W. Beinecke Professor of Economics and President, Yale University David Swensen's creative and disciplined approach to investment has given Yale the resources it needs to augment its capacity for excellence in scholarship and teaching. Those who absorb the wisdom in this book will likewise strengthen the institutions they serve. -- Review

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Product Details

• Hardcover: 364 pages
• Publisher: Free Press; 1 edition (May 15, 2000)
• Language: English
• ISBN-10: 0684864436
• ISBN-13: 978-0684864433
• Product Dimensions: 9.3 x 6.1 x 1.4 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.3 out of 5 stars  See all reviews (17 customer reviews)
• Amazon.com Sales Rank: #158,653 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

47 of 50 people found the following review helpful:

5.0 out of 5 stars A must-have for MBA students and investment professionals, April 19, 2001

By	"bookriver" - See all my reviews

First of all, Swensen and Takahashi's team puzzled me by its consistent performance to beat the benchmark for over 15 years, with last year¡¯s stunning annual return of 41%, leading the assets under management to easily surpass $10 Billion. The book is not only a great resource to look into the minds of the people who made this happen but also a wonderful application of finance, investment, asset allocation, strategy and management that you are learning in business school. Without mentioning the merits of the finance theory and investment techniques, the book is presenting a compelling case study of how investment office fits into the picture of institution building.

Second, the fascinating aspects of the book is the ¡°unconventional approach¡±, not just simply statistics and financial modeling, for long-time horizon investing. For example, in asset allocation and manager selection, it can come from topdown analysis with support of quantitative modeling and sophisticated simulation; it also can come from scientific findings and number crunching to uncover the value creation process, which usually leads to the later asset allocation strategy to fully take advantage of the discoveries.

Third, the stress and analysis of alternative investment assets and absolute returns are also worthy of mentioning. Contrary to what traditional financial theories or books focusing on efficient markets, Swensen¡¯s book casts a lot of insights on the less-covered alternative asset classes and less efficient markets. Interestingly, they never seem to be constrained by their own defined class by constantly exploring those asset classes. For example, Swensen is famous for backing venture capital and private equity. It is true that they took the plunge well before others did. Nevertheless, they explore much more than that --other inefficient markets and conventionally less-discovered places.

Finally, there are some more things that I would love to see in the book¡¯s next edition or a new book. One intriguing aspect of Yale Investment Office is its consistently great performance, which happens to coincide with the very volatile years from 1985-2001. Think about the Black Monday in 1997, the stagnation (coupled with high inflation) in late 1980s, bull market, bear market, Asian Financial Crises, Russian Default, Internet bubbles in 2000 and recent bubble-burst. How they weather through the storms as well as sunny days in a systematic way would be really worthy of reading. How do they deal with financial innovation, such as some exotic financial instruments and hedge funds?

In general, I would rate this book the highest score, with high hopes for another book from their team.

28 of 29 people found the following review helpful:

5.0 out of 5 stars Truly unique insight into institutional portfolio management, April 11, 2003

By	I. Mihaljevic (United States) - See all my reviews (REAL NAME)

Swensen's book is a must-read for endowment managers and other institutional investors, particularly those who take a fund-of-funds approach (as does Yale, where Swensen is Chief Investment Officer). Swensen aptly lays out the investment policy that has enabled Yale to consistently outperform other U.S. endowments. As Yale's CIO, Swensen has set a target portfolio allocation that departs significantly from the still heavily U.S. equity and debt-focused strategy of most endowments. Swensen's approach includes a large allocation to asset classes that are not highly correlated to the U.S. public equity market. He outlines these "alternative" classes in his book, giving the reader an excellent view of how alternative investments can increase risk-adjusted portfolio returns.

Perhaps the biggest contribution of Swensen's book, however, is the debunking of myths that still lull fiducaries into making the wrong decisions, for example when it comes to picking investment managers. Swensen advises against chasing managers who have performed well simply because of their past performance. If attributes such as personal integrity and the right fee structure are lacking, solid past performance can become a liability, not an asset. Swensen describes the example of private equity firm KKR-- after tremendous early successes, the flood of investor capital into KKR enabled the firm's partners to set up a fee structure that ensured big payoffs for themselves even if their funds underperformed. This is just one of many valuable lessons the reader will draw from Swensen's book.

17 of 17 people found the following review helpful:

4.0 out of 5 stars Worthwhile addition to your investment library, December 26, 2004

By	Neil Chelo (Renton, WA USA) - See all my reviews (REAL NAME)

Fine book, it is full of common sense and worth reading. Author covers a variety of topics, from different investment periods of high inflation to stock market bubbles, large cap equities to hedge funds, asset allocation to market timing, active management to passive management...

Book highlights include:
1. Looking beyond mainstream investment opportunities. Benefits awarded to those that travel in illiquid and inefficient segments of the market.
2. Portfolio rebalancing, correlation matrix assumptions, optimizers.
3. Contrarian Investing.
4. Manager performance assessment and biases in index data.
5. Benefits of US Treasuries in a portfolio.
6. Multiple examples of BAD Investment ideas. Panic of 1998. Outlier events.

Neil R. Chelo, CFA