Hottest investors not named Buffett or Lynch have seldom achieved sustained returns above 20%. Fewer still can claim to have delivered accelerating returns north of 20% during a period of market turmoil.
But that’s what David Swensen’s team did. See for yourself: In 2005 they had a total return of over 22%, almost 23% in 2006 and a whopping 28% in 2007.
So who is Dwensen? Would you believe he’s not a mutual fund manager nor even a venture capitalist, he’s the chief investment officer for the Yale University endowment.
Over the past 20 years he and his team have earned over 15% a year and over the last 10 year period they have generated returns of almost 18% a year. Thats after the fees.
This, in my opinion would make him arguably the second best investor on the planet.
Want To Achieve Those Results?
Ever heard the saying watch and learn, thats what you have to do? Thats exactly what needs to be done, study what the hottest investors do, how they invest, what information do the use to pick stocks. Swensen has a different approach, one that is quite unique and worth looking at because it’s something that can be duplicated with a little effort on your part.
Instead of picking stocks like Warren Buffett does he allocates his funds to different expert fund managers. He picks the experts and then lets them do the stock picking, and you cant argue the results.
In an interview with Motley Fool Rule Your Retirement editor Robert Brokamp in 2005 Swensen says:
“We look for the best external advisors that we can find to manage portions of each of our asset classes. We just don’t think it is realistic that we could bring everybody that we needed to make security-specific decisions to New Haven, Connecticut, and make it happen there. So our partners are scattered all over the world.”
Putting Your Money Where Your Mouth Is
Thats exactly what Swensen and his team are doing, They know who the hottest investors are and have invested large amounts of the “Personal” money in to the same exact investments that they intrust the Yale University endowment’s to.
What Have We Learned
- First - I like a person who is willing to put their own money right beside mine. Shows a commitment on their part on where they invest the fund entrusted to them.
- Diversify, diversify, diversify is the key. Do it right and intelligently and you can enhance and stabilize long-term results.
- Diversify across not only investment vehicles but “Hottest Investors”, investment styles (value vs. growth) as well as geography (domestic vs. foreign).
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