The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets
The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets book cover

The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets

Paperback – April 5, 2011

by
Price
$17.39
Format
Paperback
Pages
240
Publisher
Wiley
Publication Date
ISBN-13
978-1118008850
Dimensions
6 x 0.8 x 9 inches
Weight
10.4 ounces

Description

From the Inside Flap "We all know that the most impressive investment returns are from endowment funds and, in particular, Yale and Harvard. Faber and Richardson take us inside these two funds and show us how to replicate that model for our portfolios. The Ivy Portfolio is an easy to read and understand book that will make the process of asset allocation and investment easier for readers. And in light of the recent market turmoil, its lessons are even more important." — John Mauldin , author of the bestselling Bull's Eye Investing and the weekly newsletter Thoughts from the Frontline "Meb Faber makes a most compelling case for quantitative active asset allocation. Investors of all levels of sophistication will benefit handsomely from the insights and analyses presented in The Ivy Portfolio ." — Rob Arnott , Chairman, and Jason Hsu, Chief Investment Officer, Research Affiliates, LLC; coauthors of The Fundamental Index: A Better Way to Invest "Analysis of institutional holdings (13F analysis) is one of the most useful yet underused tools in an investor's research arsenal. Along with taking readers into the arcane world of endowment investing, The Ivy Portfolio provides actionable advice on how to trade alongside the top investment professionals of our time." — Justin Walters , cofounder, Bespoke Investment Group LLC A do-it-yourself guide to investing like the renowned Harvard and Yale endowments The Ivy Portfolio shows step by step how to track and mimic the investment strategies of the highly successful Harvard and Yale endowments. Using the endowment Policy Portfolios as a guide, the authors illustrate how an investor can develop a strategic asset allocation using an ETF-based investment approach. With all of the uncertainty in the markets today, The Ivy Portfolio helps the reader answer the most often asked question in investing today—"What do I do?" "[Faber and Richardson] analyze how the endowments of Harvard and Yale posted such world-beating performance. Then they offer a simplified model that regular people can adopt." — Bloomberg Businessweek "We all know that the most impressive investment returns are from endowment funds and, in particular, Yale and Harvard. Faber and Richardson take us inside these two funds and show us how to replicate that model for our portfolios. The Ivy Portfolio is an easy to read and understand book that will make the process of asset allocation and investment easier for readers. And in light of the recent market turmoil, its lessons are even more important." ― John Mauldin , author of the bestselling Bull's Eye Investing and the weekly newsletter Thoughts from the Frontline "Meb Faber makes a most compelling case for quantitative active asset allocation. Investors of all levels of sophistication will benefit handsomely from the insights and analyses presented in The Ivy Portfolio ." ― Rob Arnott , Chairman, and Jason Hsu, Chief Investment Officer, Research Affiliates, LLC; coauthors of The Fundamental Index: A Better Way to Invest "Analysis of institutional holdings (13F analysis) is one of the most useful yet underused tools in an investor's research arsenal. Along with taking readers into the arcane world of endowment investing, The Ivy Portfolio provides actionable advice on how to trade alongside the top investment professionals of our time." ― Justin Walters , cofounder, Bespoke Investment Group LLC A do-it-yourself guide to investing like the renowned Harvard and Yale endowments The Ivy Portfolio shows step by step how to track and mimic the investment strategies of the highly successful Harvard and Yale endowments. Using the endowment Policy Portfolios as a guide, the authors illustrate how an investor can develop a strategic asset allocation using an ETF-based investment approach. With all of the uncertainty in the markets today, The Ivy Portfolio helps the reader answer the most often asked question in investing today―"What do I do?" "[Faber and Richardson] analyze how the endowments of Harvard and Yale posted such world-beating performance. Then they offer a simplified model that regular people can adopt." ― Bloomberg Businessweek Mebane T. Faber , CAIA, CMT, is the Portfolio Manager at Cambria Investment Management where he manages equity and global tactical asset allocation portfolios and the Cambria Global Tactical ETF (GTAA). He is a frequent speaker and writer on investment strategies and authors the World Beta blog. Eric W. Richardson , JD, is the founder and CEO of Cambria Investment Management. He serves as the co-manager of the global tactical asset allocation portfolios and the Cambria Global Tactical ETF (GTAA). Read more

Features & Highlights

  • A do-it-yourself guide to investing like the renowned Harvard and Yale endowments.
  • The Ivy Portfolio
  • shows step-by-step how to track and mimic the investment strategies of the highly successful Harvard and Yale endowments. Using the endowment Policy Portfolios as a guide, the authors illustrate how an investor can develop a strategic asset allocation using an ETF-based investment approach.
  • The Ivy Portfolio
  • also reveals a novel method for investors to reduce their risk through a tactical asset allocation strategy to protect them from bear markets. The book will also showcase a method to follow the smart money and piggyback the top hedge funds and their stock-picking abilities. With readable, straightforward advice,
  • The Ivy Portfolio
  • will show investors exactly how this can be accomplished―and allow them to achieve an unparalleled level of investment success in the process.
  • With all of the uncertainty in the markets today,
  • The Ivy Portfolio
  • helps the reader answer the most often asked question in investing today - "What do I do"?

Customer Reviews

Rating Breakdown

★★★★★
30%
(88)
★★★★
25%
(73)
★★★
15%
(44)
★★
7%
(20)
★
23%
(67)

Most Helpful Reviews

✓ Verified Purchase

Investor beware

I bought this book when it first came out. It is very well written and interesting read. The author is clearly well versed and knowledgeable. I dont have the resources or knowledge to verify his research or fully replicate his advice. So I did what I thought was the next best thing. I bought the first ETF Meb launched based on his research: GTAA. The ETF has been dismal. You can review the details and prospectus on the advisors website: http://www.advisorshares.com/fund/gtaa. Return since 2010 inception has been -.45% annual vs 14.06% annual for the S&P 500 index. Meb was replaced as the portfolio manager in 6/2014, so he is still responsible for most of the performance.
Meb is a prolific presence on the internet and is commendably very transparent. He publishes his own personal investment strategy and has also launched 6 other ETFs: http://www.cambriafunds.com/. Their results have been similarly poor.

I would be very cautious in implementing his advice. He reiterates often that his methods capture most of the upside while limiting downside in any market. He certainly has missed the upside. GTAA flatlined while the market doubled. Perhaps he will be vindicated in the next downturn.
71 people found this helpful
✓ Verified Purchase

Awful

I wrote my thesis on university endowment investment strategies - so I know a thing or two about the subject.

And with this authority, I can say with complete confidence that the Ivy Portfolio is about as bad as it gets. The wide variety of inane strategies suggested are inappropriate for every investor: be it Yale or the little guy.

If you are interested in learning about the successes of Yale and how to tweak those successful strategies for yourself - then go to the source: Yale's Chief Investment Officer, David F. Swensen, has written two books on the subject. One of them, [[ASIN:0743228383 Unconventional Success: A Fundamental Approach to Personal Investment]], is even geared for the individual investor.
32 people found this helpful
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Kindle Edition

The charts and tables in the Kindle edition are virtually unreadable, either on the Kindle itself or on a computer using the Kindle app. Because of copyright restrictions, nothing can be copied or printed from the book, removing any possibility of creating a readable version. My rating is based solely on this issue and is not an opinion on the substantive content of the book itself.
18 people found this helpful
✓ Verified Purchase

you would be very disappointed, but he tried to make it up for ...

This book only tells you how Harvard and Yale form their investment portfolio, but these are organizations who spend millions of dollars having people manage their portfolio. If you are a paycheck earner, this book is only an entertainment. The author admits that we ordinary folks can’t do what Harvard and Yale do. He knew that by the time you read that far, you would be very disappointed, but he tried to make it up for the money threw away buying his book. He suggested you buy so many percent stocks, so many percent this and that, but if you do that you will be wasting a lot of money on commission designing your lousy portfolio that cannot prevent you from a bubble burst. To keep things in proportion periodically, you have to buy and sell you holding. The book is nothing but a story telling book; it’s half-full of fluff.
8 people found this helpful
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One Star

Lengthy and short on substance. The author could have summarized it in one chapter or less.
4 people found this helpful
✓ Verified Purchase

Skip this

Not what I was expecting. Too much superfluous fluff to get to the point
4 people found this helpful
✓ Verified Purchase

A lucid outline of how to build a well diversified portfolio

Faber has a unique gift to bridge the divide between quantitative asset allocation techniques and plain English. I first read his paper on tactical asset allocation and have been a big fan ever since. This book is centered first around how Yale and Harvard build their portfolios to outperform the market -- by diversifying into different asset classes, including illiquid and inefficient ones where alpha is easier to find, and hiring managers to add the extra kick to beat the benchmarks. In the second part of the book, he describes the paper and the asset rotation strategy I mentioned above. The final part of the book talks about a replication strategy using 13F filings to mimic the portfolios of top managers. He describes each of these three strategies lucidly. I also really like his ample use of references to books, companies and talents of others in the investment management profession, and I've got quite a list of additional reading material from his recommendations and citations throughout this book.
4 people found this helpful
✓ Verified Purchase

I respect Meb Faber's integrity. Keeping it simple.

I bought and read this book.
Regarding some of the other comments I don't see a problem. First of all get a stock charts.com membership, its cheap for the basic version and you can save a 10-20+ group of his ETFs and have them as monthly charts using a 10 MA as he suggests- easy.
I agree with finding an ETF that is liquid and heavily traded.
It's well known that using a monthly 10 MA is successful over the long term and has been tested using the 200 day against the DOW, which is the 10 monthly. So not a new strategy.
The hardest thing is always for an individual to have the discipline to stay with the model even when it seems to be underperforming.
What I like is the lower volatility and fewer drawdowns. The hardest thing for me and many is staying with a model during drawdowns, so if the model has fewer gut wrenching declines than its easier to stay with it.
Even if the returns are similar to buy and hold of the SP how many of you can withstand those huge ups and down. I don't prefer that, at all.
Even if one just used the VTI (SP index) and held above the 10 MA and was cash below it you'd come out nicely in the long run.
Regarding backtesting try using portfoliovisulaizer if you want. But don't use a short time period.
Say what you will about past not being relevant to the future, but as long as humans are involved in trading than momentum and fear and greed will support a model like this.
3 people found this helpful
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Tactical Asset Allocation

As a long time investor I have read many different books on investing. What makes this book different is specific methods are discussed and back tested. The methods have been proven to work over long periods of time. The methods can be implemented with out a great deal of time, knowledge or cost.

I developed a diversified, low risk method, to achieve above average returns, with lower draw downs then buy and hold, using the concepts present in the book based on back testing I have done.

I would rank this as the best investment book I have ever read. Well worth money!

Check out the World Beta web site, lots of great information from the author.
3 people found this helpful
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Another Book Review from The Aleph Blog

This is an unusual book, and a good book. Unlike the book, "Outperform," which reviews lesser known endowments, and endowment investing generally, this book reviews the Harvard and Yale endowments, which up until 2008, the year before the book was published, were among the best in terms of performance.

But this book is more than that. It goes through the strategies of the major endowments, and looks for ways that average people can try to replicate the results.

But average investors don't have the same set of investments available to them as the large endowments do. If you aren't a qualified investor who has access to the full range of investments ordinary mortals are denied -- private limited partnerships (hedge funds, private equity, commodity funds, etc), what can you do? This book discloses investments that are similar if not equivalent, and versions that are lower cost through ETFs.

After that, the book takes a direction that would initially seem different than endowment investing. It discusses trend following, which endowments do not in general use as a strategy. Now, some hedge funds use it, but few endowments actively embrace it. The book shows how return can be enhanced and volatility reduced by buying investments that are over their 200-day, or 10-month moving averages. From my own research I can partially validate the approach. It is a clever way of implementing a form of momentum investing, which may be a cheap way for average investors to mimic hedge funds who follow trends.

Then mimicry moves to a new level as the book goes through the basics of mining data out of 13F filings, where large investors file their long investments with the SEC. Guess what? Imitating bright people can help an investor beat the market -- it can allow a bright person to mimic the long side of equity investing on the cheap, but with a lot of data analysis (or you can pay up for Alphaclone).

In one sense, the book seems like two books -- one on endowment investing, and another on tools for clever investing available to average investors. My way of reconciling the two is that the authors are clever guys who are trying to give their best ideas to retail investors so that they can do as well as sophisticated institutional investors who have a wider array of investments to choose from. The retail investors don't have the same array of investments to choose from, but they have the advantage of flexibility that institutions don't and can more quickly trade out of investments that may be on the way to underperformance via trend-following.

And so with much effort, if you apply their ideas, you have the potential of doing as well in investing as the major endowments. Or, absorb one of their passive strategies with little effort, and maybe you will do as well. Strategies that have done well in the past may not do so in the future.

But on the whole, I heartily recommend this book. There is a lot for investors of all types to learn from it.

Quibbles

Those reading the book should also read my essay, "Alternative Investments, Illiquidity, and Endowment Management." (Google it if there is no link) Taking on illiquidity is not a free lunch. It can impose real costs when there is a need for cash among those endowed. Personally, I think that ten years from now, illiquid investments will only be taken on by those that can lock them away.

Who would benefit from this book:

Those wanting to potentially mimic the high returns of the Harvard and Yale endowments could benefit from the book, but realize that a lot of the past is an accident, and that it might be difficult to achieve high returns in the future from strategies that worked in the past. That said, the authors have offered strategies that take some degree of work to apply, so there may be barriers to entry for applying some of the strategies, which would allow the strategies to continue to work.
3 people found this helpful

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