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The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets Hardcover – March 30, 2009
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"Markets left investors almost no place to hide last year, with nearly every asset class heading south. Money manager Mebane Faber of Cambria Investment Management outperformed by a mile, however.....Faber is co-author of the The Ivy Portfolio, which details his approach. Following the investment tenets of the Harvard and Yale endowments (which until last year both had sterling performance) but without using their riskier alternative assets, he demonstrates how to outperform with lower volatility."—Barron’s (April 27, 2009)
"Does the Ivy Portfolio deserve a spot on Dad's bookshelf? With its graphics, tables and step-by-step guidance, the book is often more straightforward than a college financial aid form."—Wall Street Journal (June 16, 2009)
From the Inside Flap
Despite the general success of the top endowments, 2008 proved difficult for many buy-and-hold investors as well as the endowments. Many asset classes finished the year with declines of 30% or more.
The Ivy Portfolio shows how individual investors can mimic the stellar long-term investment track records of these top endowments while avoiding bear markets like 2008.
The Ivy Portfolio begins by examining the theory, process, and discipline behind the success of the Yale University and Harvard University endowments. It demystifies the techniques that the ivory-tower academic practitioners use to manage their portfolios and shows step by step how an individual investor can hope to duplicate their returns using an innovative ETF-based investment strategy.
The Ivy Portfolio then demonstrates a simple tactical asset approach to dampen the impact of bear markets on long-term investment results. The model would have protected an investor from the carnage of 2008, all while eliminating the uncertainty and emotions of investing.
The Ivy Portfolio also showcases a method to piggyback the stock-picking abilities of top hedge funds, allowing investors to achieve greater success by following the valuation insights of the smart money.
The Ivy Portfolio will show investors exactly how all this can be accomplished—and allow them to achieve an unparalleled level of investment success in the process.
Top Customer Reviews
The Ivy Portfolio has none of those problems. "Not bad" isn't the same as good, but this book is good. It is full of ideas and useful information; the disclosure is extensive, allowing reproducible results; it is well written; it is data driven; it is right based on the historical evidence, and I think the recommendations will prove to be robust.
Under the theme of learning best practices from the most successful investors, Ivy has not one but three big ideas: do what the "super endowments" do (diversify into additional asset classes); employ systematic timing to reduce risk; follow the best investment managers. A non-professional (but responsible) investor will understand how to do these things after reading Ivy, and I believe will do much better than buy-and-hold management (or in practice, "winging it"). It won't take much time or special resources to manage an Ivy Portfolio. The companion website, [...] should be a good adjunct.
Any concerns? I suggest that more discussion about pitfalls in choosing ETFs to implement the less familiar asset classes would be good. More importantly, the underlying idea is patterned after endowments and hedge funds. The typical individual investor has a time horizon and risk profile driven by the life cycle: accumulation, transition, decumulation (systematic withdrawal to provide retirement income).Read more ›
The first section, which is really the discussion of University Endowment success, feels dated. We've been hearing about Harvard, Stanford and Yale suffering losses, budget cuts, and Harvard even went through a cash crunch. I feel the section doesn't sufficiently address liquidity problems and the risks of lost capital.
The second section is fantastic. It puts forward a portfolio that is mechanically trivial to replicate for an individual investor. His website has a detailed FAQ section, and he is even responsive via e-mail. The thing that struck me is that this section puts forward a model that's excellent at protecting against downside risk (which is often what makes investors leave markets at bottoms). The model is also extremely liquid, with very easy entry and exit. Its interesting that this should be called the "Ivy Portfolio" given significant drawdowns and liquidity problems within the actual "Ivys".
Don't be misled by the title. There have been a number of books written in the past few years on the subject of successful endowment fund managers and the use of alternative asset classes (most not available to the small investor). While there is a very good discussion of the Harvard and Yale Endowment Funds, the heart of this book is a well laid out step by step explanation of several methods for improving returns and managing risk that are easy to follow and implement with a discount brokerage account. While some of the information is available on the "World Beta" web site, the book is a much easier and complete way to set about using the models and strategies.
Among other useful features I appreciate in a "how to" book that this book contains is a bullet point summary at the end of each chapter.
Here are lists of minor complaints:
* It assumes that investors have a good knowledge about various ETF's, which may not be the case. It does not shows the holdings in VEU (FTSE All Word ex US ETF), which contain Nestle, BP PLC, Total SA, HSBC and Novartis etc. It does not show the composition of DBC (PowerShares DB Commodity Track) which contains 34% WTI crude oil, 17% gold, 17% heating oil, 14% wheat, 13% corn and 11% aluminium.
* Some of the recommended ETF's are very thinly traded. There are better alternative vehicles. For example, it recommends EWX (SPDR S&P Emerging Markets Small Cap) for emerging market small cap. EWX is trading about 7,000 shares a day and only has $7 million of assets. A better alternative is DGS (WisdomTree Emerging Markets Small Cap Div) which is trading around 22,000 shares a day and has $52 million in assets.
* 10 month moving average is not easy for average investor to obtain. A readily available alternative is 200 day moving average. 200 trading days equate to 9 months and 1 week. The information is available on Yahoo Finance Chart.
Most Recent Customer Reviews
Perfect as always Meb. This book is a home run! Thank you.Published 7 hours ago by Read Economics All the Time
First time I have done a review. But when I saw this book while doing a search I had to review it to prevent others from purchasing. Don't waste your time.Published 20 days ago by Amazon Customer
I bought and read this book.
Regarding some of the other comments I don't see a problem. First of all get a stock charts. Read more
Limited applicability outside of a very long term context. Interesting read none the less.Published 2 months ago by James Grey
Excellent read and history of the success of certain Ivy League investment portfolios of the schools' endowment funds. Read morePublished 3 months ago by TRS LAW
Great book. It shows you how to invest like university foundations with 5 ETFs and simple buy and sell rules. A must read for investors.Published 3 months ago by Amazon Customer