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Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment
Books: Computers: Memory Management: Item 8
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Pioneering Portfolio Management: An Unconventional Approach to Institutional Investmentby David F. Swensen
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40 of 42 people found the following review helpful: A must-have for MBA students and investment professionals, April 19, 2001 Reviewer:"bookriver" - First of all, Swensen and Takahashi's team puzzled me by its consistent performance to beat the benchmark for over 15 years, with last years 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, Swensens 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 books 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.
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
Product Review
Jack R. Meyer,President and CEO,
Harvard management Company, Inc.
A masterful work by the master himself. We at Harvard wish that David Swensen would find a new job.
Burton G. Malkiel, Chemical Bank
Chairman?s Professor of Economics, Princeton University
One of the world's most successful institutional fund managers presents powerful insights to help us become better investors. A must-read for both institutional and serious individual investors.
Peter L. Bernstein, President
Peter L. Bernstein, Inc.
This book will be a classic: it is essential reading for all investors, great and small. David Swensen is a leader and pioneer whose words reveal a rare combination of courage, integrity, and intelligence. No one can fail to find value here.
Barton M. Biggs, Chairman,
Morgan Stanley Dean Witter Investment Management
David Swensen is one of the best and most original fiduciaries of modern times. His thinking has survived the battlefields and it has worked for big money.
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.
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