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Unconventional Success: A Fundamental Approach to Personal Investment Hardcover – August 9, 2005
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-- John C. Bogle, founder and former CEO, The Vanguard Group
"Swensen is the best. Always a pioneer, his new book presents an approach to investing that is both brilliant and practical."
-- Barton Biggs, former Chief Global Strategist, Morgan Stanley
"A legendary institutional investor reveals the conflicts of interest that induce most financial services companies to provide inadequate products for the individual investor. Swensen's wise solution: Low cost, tax efficient, market-mimicking funds available either through Exchange Traded Funds (ETFs) or from not-for-profit mutual fund companies. Unconventional Success does for the individual investor what Swensen's Pioneering Portfolio Management did for the institutional investor."
-- Burton G. Malkiel, author of A Random Walk Down Wall Street
"David Swensen is one of today's best endowment managers, if not the best. Unconventional Success is a perfect summary of what is wrong with a very important industry. This book should lead the reader to better investment decisions."
-- Michael F. Price, Managing Partner, MFP Investors
"Unfortunately, at the bottom of our industry -- money management -- there is a rather thick layer of muck, and Swensen's Unconventional Success rakes through this muck in spectacular fashion and great detail. It is the truth, the whole truth, and the very ugly truth. If you want to avoid the snares that lurk in money management, and save yourself lots of money, you must read it."
-- Jeremy Grantham, Chairman of GMO
Top Customer Reviews
Swensen compellingly makes the case that (a) the vast majority of passively managed funds outperform actively managed funds (after fees), (b) the vast majority of the mutual fund industry allows profit motives to trump their fiduciary duty to investors, and (c) an individual investor's financial assets are best managed by non-profit organizations - i.e., Vanguard or TIAA-CREF.
Swensen lays out six "core" asset classes that should form the basis of an individual investor's portfolio, each of which should comprise between 5% and 30% of the portfolio. Below is the "generic" target portfolio outlined in the book:
1. Domestic Equity (30%)
2. Foreign Developed Market Equity (15%)
3. Emerging Market Equity (5%)
4. Real Estate (20%)
5. U.S. Treasury Bonds (15%)
6. U.S. Treasury Inflation-Protected Securities (15%)
Swensen also discusses "non-core" asset classes and why each should not be a part of an individual investor's portfolio. These "non-core" asset classes include:
1. Domestic Corporate Bonds, 2. High Yield (Junk) Bonds, 3. Tax Exempt (Municipal) Bonds, 4. Asset-backed securities, 5. Foreign Bonds, 6. Hedge Funds, 7. Leveraged Buyouts, and 8. Venture Capital. We spent so much time in business school glorifying these assets that I found the rationale for why they have no place in an individual's portfolio quite useful.Read more ›
I recently saw several articles about Harvard's endowment manager leaving Harvard to set up his own firm. I was amazed to see how diversified the Harvard fund was in that it included not just stocks and bonds, but many other asset classes:
U.S. equities 15%
Private Equity 13
Hedge Funds 12
U.S. Bonds 11
Foreign Equities 10
Real Estate 10
Inflation-Indexed Bonds 6
Emerging Markets 5
Foreign Bonds 5
Borrowed Money -5
This info came from 12/27/04 Business Week article. The same article said Harvard's endowment fund grew from $4.7B in 1990 to $22.6B in 2005. This sounds impressive until you calculate the compounded return, which is 11.04%. Simply investing in an S&P 500 index fund over the same time period would have given roughly a 10.91% compounded rate of return.
Swensen seems to have followed a similar very diversified approach at Yale.
I really enjoyed the explanation of why certain asset classes should not be included in investor's portfolios.....specifically foreign bonds.
Since I am an avid Index Fund investor, Swensen was preaching to the choir with regards to blasting the "for profit" mutual fund companies. Being a Vanguard investor, I was disappointed to see Vanguard take one hit for following one type of unsavory practice. Compared to the "for profit" mutual fund companies, Vanguard is a shining angel.
The successes of Harvard's and Yale's endowment fund investments are spreading the gospel of the advantages of asset allocation.Read more ›
1. Gives advice on companies which can be trusted and provide products and investments where the investors objectives are aligned with the products (stocks, etfs, government bonds etc).
2. Lists specific indecies and providers he favors over others. There are tons of etfs out there so it's helpful to see a list he likes. He goes into detail about why some are more efficient then others.
3. Straightforward writing and sections. Easy to skip things you may already know (e.g. most mutual funds should be avoided).
4. Written by someone whe has done this with great success himself.
1. Spends long sections in the book going into perhaps too much detail on specific examples of assets to avoid.
2. Regarding #1, I would have preferred more detail on specific allocations and products he likes and how we should use them best.
3. His own asset allocation at Yale includes a substantially different asset mix but he never gives detail on why Yale buys these things (e.g. Hard Assets) but individuals can or should not.
4. No advice on any sample portfolio.
5. Some mention of DFA would be nice.
In the end, I still prefer William Bernsteins "The Intelligent Asset Allocator" but this book is right up there and is one of the best I have read in years (and I have read most all of them).
Most Recent Customer Reviews
Lifting the lid on the investment management industry. Useful advice on asset allocation. Highly recommended for anyone of any age!Published 18 days ago by Siddharth N Jha
I expected a more complete treatise on retail investing. While it's there, kind of, the book really swerves into investigative journalism-style reporting on the shadiness of the... Read morePublished 4 months ago by Robert A. Lacroix
The hardest part about index fund, buy-and-hold investing is staying the course during market downturns. Read morePublished 6 months ago by Amazon Customer
David Swensen's definition of "fundamental" may be different than mine. Book is far more technical than I had anticipated. Still working my way through it. Read morePublished 10 months ago by Stephen H.
If you want to learn investing - this is one of the top 10 must readsPublished 10 months ago by Brandon
Every average investor needs to read this book that simplifies the concept of asset allocation. Simple advise is given to everyday people about how to avoid high fees charged by... Read morePublished 11 months ago by Prof. Buck