John Kimelman writing in has a Q&A session with David Swensen, Chief Investment Officer of Yale University’s endowment fund. Swensen’s book, Unconventional Success: A Fundamental Approach to Personal Investment is receiving wide exposure in the press.

The theme of the Q&A focuses on Swensen’s belief that individual investors should not attempt to choose active managers, rather they should focus on a diversified portfolio of low-cost, index funds. An excerpt:

Q: It’s pretty well known that most of the variance in investment performance — 90% or more — can be explained by basically broad asset allocation decisions rather than by individual stock and bond selection. Why is it, then, that so many investors still focus on picking the right stocks and bonds?
A: Because it’s fun. Individuals systematically get it wrong and whether it’s because it’s exciting to pick individual stocks or try and find a hot mutual fund or because they are conditioned to do that, who knows?

The article also includes a handy table with Swensen’s target portfolio for individuals:

  • U.S. stocks 30%
  • Foreign stocks (developed) 15%
  • Foreign stocks (emerging) 5%
  • Real estate 20%
  • U.S. Treasury bonds 15%
  • Inflation-protected Treasuries 15%

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.

Please see the Terms & Conditions page for a full disclaimer.