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5.0 out of 5 stars Truly unique insight into institutional portfolio management
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...
Published on April 11 2003 by John Mihaljevic

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3.0 out of 5 stars Much Too Mainstream
Before everyone reading this review decides to kill me I would like to say that David Swensen has indeed written an informative book; his treatment on the subject of "value added" or alpha is enlightening. However, "Pioneering Portfolio Management" is far too simplistic and mainstream for the initiated. The fact that he classifies private equity and...
Published on Sept. 20 2000


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5.0 out of 5 stars Truly unique insight into institutional portfolio management, April 11 2003
By 
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
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.
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5.0 out of 5 stars A must-have for MBA students and investment professionals, April 19 2001
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
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.
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5.0 out of 5 stars Original thought and a rare look into an important world, Dec 8 2000
By 
Unsatisfied (Redwood City, CA USA) - See all my reviews
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
I give this the highest rating available for two reasons: First, it gives rare insight into the forces driving generally any institution and in particular investments by endowments and foundations. Second, Mr. Swenson provides surprisingly original and expectedly sophisticated thoughts on a number of new and crucial aspects of portfolio management from a wholistic and asset-class specific perspective. He also provides a fresh look at new or often brushed over topics including alternative investments, evaluation of quantitative strategies, and evaluation of managers within each asset class. Although the investments of the Yale Endowment are well known, I knew little about David Swenson prior to reading this book. I came away very impressed with his thoughts. He managed to provide insight and make interesting a lot of topics previously thought simple.
Generally speaking there are two sources of capital available, those from individuals and those from institutions. Every other investment institution(ie, investment banks, mutual funds, hedge funds, brokerages) are simply intermediaries that help transform investment capital into working capital. Understanding the needs of both individuals and institutions is crucial from a number of perspective. For an economist, both groups represent fundamental causal mechanisms in the flow of capital. For anyone in the investment business from stock brokers to investment bankers to hedge fund managers, both individuals and institutions represent a significant potential source of revenue. More information than we need to know is available about the individual. However, surprisingly little good information is available about institutional investors. If anything, the first half of this book provides a useful look into the views of an institutional investor.
Aside from providing a look at the industry, this book was undoubtedly insightful from a pure finance/investment perspective. Mr. Swenson manages to shed light on a lot of topics that were previously taken for granted. Examples include his illustration that on a risk adjusted basis, private equity funds(LBO and venture capital)on average don't perform that well. Only top-tier funds are beating the "market" (S&P500), and only they're worth investing in. Moreover, he's even shed light on the much whispered....never talked about fact that perhaps private equity managers are overcompensated.
His examination of alternative investments is only one aspect of the book. He also provides a fresh look at other important topics that often go unnoticed such as the limitations of mean-variance optimization in asset allocation, active vs. passive fund managers, the role of real estate within the overall portfolio, the significance of REITs, and many others.
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3.0 out of 5 stars Much Too Mainstream, Sept. 20 2000
By A Customer
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
Before everyone reading this review decides to kill me I would like to say that David Swensen has indeed written an informative book; his treatment on the subject of "value added" or alpha is enlightening. However, "Pioneering Portfolio Management" is far too simplistic and mainstream for the initiated. The fact that he classifies private equity and LBO funds as alternative investments is a real turn off; by his own admission these two categories are nothing more than "turbocharged equity", hence to classify them as an alternative investments seems a bit odd. He discusses event driven strategies at length but then proceeds to categorize convertible arbitrage as "risky". I simply cannot agree with this kind of archaic thinking, the simple fact is that a great many "market neutral" styles are highly correlated. When liquidity dries up and volatility is at an extreme one can expect severe drawdowns in almost all investment classes except possibly one, which ironically Swensen neglects to even mention. Overlooking managed futures in a book written by an author whose claim to fame is heavy accentuation upon "alternative" investments is completely baffling. Top tier CTA's can bring a tremendous amount of "value added" to almost any portfolio. David Swensen may be a pioneer among endowment managers but don't forget that we are talking about quite a prosaic bunch here. The reader would have been far better served by a more in depth look at how Swensen selects individual managers rather than the pros and cons of what he arbitrarily deems as an "alternative investment".
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5.0 out of 5 stars A True Pioneer, June 30 2000
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
I found this book extremely thorough and well researched. Numerous relevant anecdotes help illustrate the author's key points and make the book a great read for investment professionals and retail investors alike.
David Swensen's biting opinions on the disadvantageous return/risk/fees combination for U.S. publicly traded securities (equities and fixed income) should be read by anyone interested in learning the cold, stark realities on trying to beat markets that are highly efficient.
Swensen and Dean Takahashi have long been held in the highest esteem by leading investment professionals. Now we know why: not only are there numbers great, but their thought processes are well thought out and understandable.
The challenge of readers of this book will be to accept the difficulties of beating the market without a true competitive advantage. Moving forward, the challenge for Swensen, and Yale, will be to continue to outperform their benchmark now that their strategy will be widely disseminated. And, of course, copied.
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5.0 out of 5 stars A True Pioneer, June 27 2000
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
I found this book extremely thorough and well researched. Numerous relevant anecdotes help illustrate the author's key points and make the book a great read for investment professionals and retail investors alike.
David Swensen's biting opinions on the disadvantageous return/risk/fees combination for U.S. publicly traded securities (equities and fixed income) should be read by anyone interested in learning the cold, stark realities on trying to beat markets that are highly efficient.
Swensen and Dean Takahashi have long been held in the highest esteem by leading investment professionals. Now we know why: not only are there numbers great, but their thought processes are well thought out and understandable.
The challenge of readers of this book will be to accept the difficulties of beating the market without a true competitive advantage. Moving forward, the challenge for Swensen, and Yale, will be to continue to outperform their benchmark now that their strategy will be widely disseminated. And, of course, copied.
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4.0 out of 5 stars Thoughtful, cautious, and quite readable, March 12 2004
By 
Peter McCluskey (Berkeley, CA USA) - See all my reviews
(REAL NAME)   
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
This book provides some well thought out advice on how to invest. It deals mainly with strategies appropriate to handling multi-billion dollar portfolios, but many of the ideas would apply to ordinary investors as well. But because he is mostly very cautious about what strategies to use, the advice won't be terribly surprising to experienced investors, and won't satisfy many risk-tolerant investors.
The one area in which I disagree with the book is his overly confident rejection of technical analysis. While most simple versions of technical analysis have not shown impressive results, and it may well be that none work with investments of the size that Yale makes, the number of successful traders who make some use of technical analysis (for example, most of those interviewed in Jack Schwager's books) should not be dismissed lightly.
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5.0 out of 5 stars Missives from the Maestro, June 7 2000
This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
As a portfolio manager, professor, writer and all round great guy, David is a remarkable person, and this book is a remarkable landmark.
The book captures the thinking that has made Yale's investment portfolio the envy of other great institutions - extraordinary returns at low beta to the market.
This is not a rocket scientists book, but is very easy to read and understand.
The book is primarily for investment professionals and those who employ them. It's also a great tool for large individual investors and students.
And the cover is cool......
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5.0 out of 5 stars Pioneering Portfolio Management, May 21 2000
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This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
This book is essential for any portfolio manager, pension fund investor, or investment manager to read. Swensen's unique ability and extraordinary portfolio returns make this required reading. He is an excellent writer and his writing style is easy to read. He simplifies a complex subject and makes it interesting as well.
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4.0 out of 5 stars Many good insights, Jan. 17 2003
By 
John Sturges (Chappaqua, NY United States) - See all my reviews
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This review is from: Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment (Hardcover)
David Swensen reveals many insights available only from experience which are valuable for individuals and boards responsible for guiding large portfolios. I wished for more detail regarding the manager selection guidelines and asset allocation/reallocation criteria however we must respect that this information is proprietary.
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