[gustavo]

Originally Posted by rubicon

When it is all said in done like the meat cutter at the meat department in your grocery store the stock broker is taking home the prime cuts first and the rest is put on display counters for customers

Bon Appetit'

I don't believe it. If they are getting all the prime cuts, they should be wealthy by now and wouldn't have to work for me trying to sell me stuff.

[NJblue]

Originally Posted by l2ridehd

The Yale investment model portfolio.

Vanguard Total Stock market index fund ....... 30%
Vanguard REIT index fund ........................... 20%
Vanguard TIPS index fund ........................... 15%
Vanguard Long Term Treasury index fund ....... 15%
Vanguard Developed Markets index fund ......... 15%
Vanguard Emerging Markets index fund ........... 5%

This model is used for 85% of their over $20 billion in endowment funds. Yes they have another $3.5 billion in a whole lot of other cats and dogs funds. Mostly because that is how they were donated to them. However as they can liquidate and migrate those funds based on the rules they received them under, they move them to the above model.

I attended high school with one of their leading investment model managers (Not David Swenson, but a person who works for him) and have discussed this model with him many times. I personally do not follow this exact model. I don't own REIT's as I own rental property. And I believe a small cap value index fund adds a better rate of return. I also use total bond and international bond in place of the TIPs and Treasuries.

Interesting. But the article that you linked from Forbes implies the opposite with quotes like:

It was developed and made famous by David Swensen, Yale’s Chief Investment Officer, and Dean Takahashi, Senior Director of Investments. They suggest that large investors, such as endowments and public pension funds, can achieve superior returns by shifting a significant portion of investments away from traditional stocks and bonds and into carefully selected hedge funds, private equity, real estate, and other alternatives.

All the spending was a waste. The returns did not develop for most of these other schools. Reading about the Yale model does not make Yale-like returns, just as reading about Tiger Woods does not turn a mediocre golfer into a professional.

The model has failed most institutions because their investment committees are far less capable than the Yale board members. The people making the investment decisions don’t have the experience or skills that Yale has compiled. In fact, many people on these boards could be considered investment novices.

If it were as simple as investing in the Vanguard funds mentioned, any of the other schools could have repeated Yale's success.

There appears to be a disconnect somewhere ... at least from my perspective.