The Swensen Portfolio by David Swensen packages the investing ideas used by the Yale Endowment in a format accessible to normal investors.
Asset Allocation
- 30% Total Stock Market
- 15% International Stocks
- 5% Emerging Markets
- 30% Intermediate Bonds¹
- 20% REITs
Asset Notes
1. Swensen specifically calls for 15% TIPS as part of the bond portion of the portfolio. I don’t have good data for that asset, so I added it to the overall IT bond allocation. Be sure to read Swensen’s explanation for why he chooses the assets he does.
Other Versions
While the allocation here is the one discussed in Unconventional Success, in later interviews Swensen recommended a small tweak where he shifted 5% of the REIT allocation to emerging markets.
Local Interpretations
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Author
David Swensen
David Swensen was the famed Chief Investment Officer at Yale who led their endowment for more than three decades. He talks about the Swensen Portfolio in his book Unconventional Success.
Overview
David Swensen is most famous for his role as Chief Investment Officer of the Yale Endowment, one of the largest endowments in the world famous for its sustained superior returns. But since the Yale Endowment manages billions of dollars and invests in all kinds of exotic assets only available to large institutions, its methods are not that attainable by your average retail investor. Swensen sought to correct that shortcoming, however, and the Swensen Portfolio is his personal investing recommendation to people like you and me.
Swensen’s philosophy goes far beyond simple asset allocation. True to his principles that are sadly all too rare among big-time investors, his book Unconventional Success makes a compelling case for individuals to take control of their investments from the financial industry that does not have their best interests in mind.
One of the notable features of the Swensen Portfolio is a sizable allocation to REITs that reflect a common endowment strategy not always embraced by mainstream asset allocators. The balance between stocks, bonds, and real assets is an important part of what makes it tick, and the Swensen Portfolio serves as an educational window into the inner workings of some of the most successful funds that are responsible not for fleeting returns but for decades of sustainable growth and income. It may especially appeal to investors like early retirees who share similar goals.
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Alternatives
Portfolios with a similar structure or design intent
Ivy Portfolio — Another portfolio directly inspired by college endowments
Pinwheel Portfolio — Similar structure with a focus on real assets
7Twelve Portfolio — Same percentage of stocks and domestic bonds with fewer real assets
Performance
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