Tag Archives: David Swensen

You Can’t Get Access to the Best Alternative Assets

One of the services most frequently touted by private wealth managers is their ability to provide access to outstanding alternative assets like hedge funds. Unfortunately very few private wealth managers have access to the hedge funds that are worth the fees. Of course, that won’t stop them from promising you the best and delivering poor alternatives. That’s why David Swensen, Yale’s Chief Investment Officer and the man most identified with employing alternative assets, essentially says in the introduction to his groundbreaking book Pioneering Portfolio Management, that if you can access premier alternative assets like hedge funds, you should, but it’s highly unlikely that you can, so you shouldn’t. Understanding Risk and Reward As we have explained many times in this blog, […]

Where’s The Revolt Against Mutual Fund Fees?

Last week came news that big banks were backing off debit card fees. ABC News highlighted the role that Molly Katchpole, a young woman from Washington, D.C., played in launching an online petition against the fees. “I don’t have an extra $60 a year to give to Bank of America,” she said. “Score one for a customer rebellion,” said Diane Sawyer. The question is why there’s no consumer rebellion when it comes to mutual fund fees. According to the Bogle Financial Markets Research Center, investors spent a total of $76.5 billion in mutual fund fees. According to the Investment Company Institute’s Fact Book, in 2010, there were 90.2 million individual mutual fund investors, representing 51.6 million households. Back of the […]

Why Disclosures Don’t Work

Last month, in a provocative op-ed in The New York Times, David Swensen, Yale University’s chief investment officer, lashed out at mutual funds. He said, in short, that mutual funds invest poorly and have fees that investors don’t understand, and that some of the brokers and advisors who sell mutual funds use “pointless buying and selling to increase and justify their all-too-rich compensation.” The Investment Company Institute, which represents mutual funds in Washington, D.C., struck back, suggesting Mr. Swensen had been led astray by his “hubris.” The ICI says the mutual fund industry already offers information and disclosures to investors. “Funds have reported their fees for decades and have published prominently displayed fee tables with a wealth of cost information […]

How To Tell If Your Advisor Eats His Own Cooking And What John Bogle Has To Say About It

A recent study by research firm Morningstar Inc. found that just 40% of mutual fund managers were doing with their own money what they want you to do with yours: invest in their funds. After the report came out, the digital ink flowed on the question of whether mutual fund managers should “eat their own cooking.” I don’t think there’s much doubt about it. Except in a few well-thought-out cases, money managers should be required by their companies to invest in their own products. I’d go one step further and say that financial advisors ought to have money in the same products they recommend to you. For years, the savviest investors, top tier endowment managers and the best financial advisors, […]

Friday Reads: Yale’s David Swensen Says Mutual Funds Are For Fish, And Stirs The Waters

Last Sunday, David Swensen wrote an op-ed piece in The New York Times titled, mildly, “The Mutual Fund Merry-Go-Round.” Mr. Swensen pointed out, as he often does, that investors tend to buy and sell at the worst times (we’re witnessing that during these days of turmoil in the market, as investors bail out at a low point). He also makes the case  that the mutual fund industry encourages investors to buy and sell – and that the churn enriches the industry and devastates investors’ returns. (In this post we offer advice on rebalancing based on Swensen’s ideas.) The content caught fire on the Internet this week, as other publications and blogs picked up on Mr. Swensen’s scathing criticism of mutual […]