Big endowments don't beat simple 60/40 over 10 yrs.

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EvelynTroy
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Big endowments don't beat simple 60/40 over 10 yrs.

Post by EvelynTroy » Mon Dec 03, 2018 8:52 am

From the Institutional Investor -
https://www.institutionalinvestor.com/a ... tq2bjm3c/
Not-One-Ivy-League-Endowment-Beat-a-Simple-U-S-60-40-Portfolio-Over-Ten-Years
The performance of Ivy League endowments has trailed a passive portfolio of 60 percent U.S. stocks and 40 percent bonds over the past ten years — and has been more volatile to boot, according to a new report from research and analytics provider Markov Processes International.

Evelyn

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by TomatoTomahto » Mon Dec 03, 2018 8:58 am

They have different goals than individual investors (ie, their horizon is perpetuity rather than double digit years). And thus, as surely as night follows day, their investments differ from individual investors.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by Nate79 » Mon Dec 03, 2018 9:06 am

Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by staythecourse » Mon Dec 03, 2018 9:08 am

EvelynTroy wrote:
Mon Dec 03, 2018 8:52 am
From the Institutional Investor -
https://www.institutionalinvestor.com/a ... tq2bjm3c/
Not-One-Ivy-League-Endowment-Beat-a-Simple-U-S-60-40-Portfolio-Over-Ten-Years
The performance of Ivy League endowments has trailed a passive portfolio of 60 percent U.S. stocks and 40 percent bonds over the past ten years — and has been more volatile to boot, according to a new report from research and analytics provider Markov Processes International.

Evelyn
Most underperforming is nothing new.. Dr. Bernstein's book "Four Pillars" has graph showing similar results at the time of that publication.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

staythecourse
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by staythecourse » Mon Dec 03, 2018 9:14 am

Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.
Good point,, but the next sentence is MORE useful in regards to the outperformance being from PE and VC. If true then it is a nonstarter for retail investors as they don't even have access to that space.

Interesting, there is actually no way an instituition ca beat a retail investor if both just held a 60/40 portfolio (SP500/ TBM as example) IF both just used index funds (no negative alpha). The reason is costs. Mr. Bogle's CMH comes up here. They have to pay their staff's salary and money managers ON TOP of the cost of the bare bone ER of index funds. So they are 100% relying on alpha to overcome their much higher cost structure.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by Ketawa » Mon Dec 03, 2018 9:34 am

EvelynTroy wrote:
Mon Dec 03, 2018 8:52 am
The performance of Ivy League endowments has trailed a passive portfolio of 60 percent U.S. stocks and 40 percent bonds over the past ten years — and has been more volatile to boot, according to a new report from research and analytics provider Markov Processes International.

Evelyn
How useful is this takeaway when the endowments are compared to a U.S.-only portfolio?

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by CyberBob » Mon Dec 03, 2018 10:24 am

Ketawa wrote:
Mon Dec 03, 2018 9:34 am
EvelynTroy wrote:
Mon Dec 03, 2018 8:52 am
The performance of Ivy League endowments has trailed a passive portfolio of 60 percent U.S. stocks and 40 percent bonds over the past ten years — and has been more volatile to boot, according to a new report from research and analytics provider Markov Processes International.

Evelyn
How useful is this takeaway when the endowments are compared to a U.S.-only portfolio?
A 'Bogle Model' three-fund portfolio consisting of 40% Total U.S. Stock, 20% International Stock, and 40% Total Bond also comes out well compared to the endowments:
https://awealthofcommonsense.com/2017/0 ... ale-model/

quantAndHold
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by quantAndHold » Mon Dec 03, 2018 10:55 am

MPI says this is the first time in the 16 years that it has been collecting data on all the Ivies that Yale, Harvard and the other elite colleges have lagged the indexed portfolio when looked at over a decade.
You could also write the article to say that for fifteen out of the past sixteen years, ivy portfolios have done better than a 60/40 index portfolio. But that wouldn’t confirm our biases as Bogleheads.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by SelfEmployed123 » Mon Dec 03, 2018 11:57 am

Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.
The article does state the endowment investing strategy of using venture capital, real estate, etc. is more expensive than in index fund. However, are the overall 15-year returns for the endowments net of fees or before fees?
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by nisiprius » Mon Dec 03, 2018 12:18 pm

TomatoTomahto wrote:
Mon Dec 03, 2018 8:58 am
They have different goals than individual investors (ie, their horizon is perpetuity rather than double digit years). And thus, as surely as night follows day, their investments differ from individual investors.
Yes, that's what people say.

Gregory Bateson's regrettably apocryphal story is that Oxford needed new oak beams, because the old ones had gotten infested with beetles over four hundred years, and discovered that the university owned timberlands managed by a forester, and had planted new oaks four hundred years earlier in order to be ready.

However, in 2008-2009 it transpired that Harvard had 80% of the funds in its General Operating Account invested in the endowment fund. Quite rather than being held for "perpetuity." Day-to-day bills were actually being paid out of the endowment fund. Thus, the crash caused layoffs, disrupted research programs for which funds had been promised, and caused a halt in a giant construction project for new facilities in Allston, which then sat for years with nothing but a colossal hole in the ground to show for it.

So, no, their horizon is not "perpetuity."

Bloomberg, February 2018: Harvard Alums Have Idea to Boost Endowment: Buy Index Funds. Text of their letter
The 2008 financial crisis, then, seems to have marked a watershed in the history of American finance, to which Harvard has not reacted appropriately. In the previous decade, hedge fund managers seemed to be capable of economic miracles—even though the crash some of those miracles to be illusory. Since then, however, they have not been able to justify the very generous compensation that they receive. Warren Buffett was right: they do not offer superior returns any more in general, and they certainly have not done so for Harvard University.

Our proposal is ... that the university put half of the endowment in the S & P 500 and keep the rest with hedge funds, at least for the time being.... We have argued for about a decade and a half that the endowment of the nation’s greatest university should not be used to enrich private interests on a massive scale. Our new proposal would address that problem. In addition, it would bring a huge fiscal benefit to Harvard in the short run, and there is every reason to think that it would do so in the long run as well.
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by nedsaid » Mon Dec 03, 2018 12:36 pm

It is a problem of portfolio creep. One can start out with a simple and effective investment strategy but evolve into greater complexity because you keep learning more and want to apply what you learn. Doubtless, the folks on these endowment committees are bright people and don't want to miss out. Well, you know, that guy over there at Yale, David Swenson, made a bundle on alternatives and we ought to find out what he was doing. Or you read a compelling book or read the academic research. It is the fear of missing out that drives the more and more complex portfolios.

I know this because I have done this myself with investing styles and asset classes. It might be a personality quirk but I like trying out new things. If an idea or an investment makes good sense, I am inclined to try it out. I might be missing out on something. But what we find out if that markets are pretty efficient. Hard to beat those benchmarks.

Plus many of us don't get listened to as much as we like. We feel as though our creativity is stifled and one of the few areas we can express ourselves is with our investment portfolios. There is a bit of that too. Pretty much good old fashioned ego. My portfolio is my magnus opus. My masterpiece.
A fool and his money are good for business.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by goblue100 » Mon Dec 03, 2018 1:10 pm

Scott Burns is writing again! At least it is appearing in the Dallas Morning news. He wrote about the under performing Texas Pension funds:
https://www.dallasnews.com/business/per ... index-fund

Hopefully the link works, I think you might get one or two articles before the pay wall comes up.
I subscribe to the DMN print version, and I will say some gentleman responded from the association of pensions funds (something like that) responded in a letter to the editor,and paraphrasing him, said:
1. Scott Burns is a big meanie
2. Sure, pensions are under performing but if the stocks and bonds hadn't done so well over the last 10 years we might be talking about how smart they were to do alternative investments.
Last edited by goblue100 on Mon Dec 03, 2018 3:49 pm, edited 1 time in total.
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by warner25 » Mon Dec 03, 2018 1:37 pm

As someone who is heavily invested in the Balanced Index Fund, this is amusing, but even I don't think it says much. The 60/40 US portfolio is overweight in the one asset class that has outperformed over the past 10 years: US stocks. Things looked much different over the 2000-2009 period. The reminder to avoid confusing good results with a good strategy seems especially relevant when people try to cite 10-year periods as evidence of something.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by nisiprius » Mon Dec 03, 2018 1:52 pm

nedsaid wrote:
Mon Dec 03, 2018 12:36 pm
It is a problem of portfolio creep. One can start out with a simple and effective investment strategy but evolve into greater complexity because you keep learning more and want to apply what you learn. Doubtless, the folks on these endowment committees are bright people and don't want to miss out. Well, you know, that guy over there at Yale, David Swenson, made a bundle on alternatives and we ought to find out what he was doing. Or you read a compelling book or read the academic research. It is the fear of missing out that drives the more and more complex portfolios.

I know this because I have done this myself with investing styles and asset classes. It might be a personality quirk but I like trying out new things. If an idea or an investment makes good sense, I am inclined to try it out. I might be missing out on something. But what we find out if that markets are pretty efficient. Hard to beat those benchmarks.

Plus many of us don't get listened to as much as we like. We feel as though our creativity is stifled and one of the few areas we can express ourselves is with our investment portfolios. There is a bit of that too. Pretty much good old fashioned ego. My portfolio is my magnus opus. My masterpiece.
Hear, hear! Ain't it the truth?
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by afan » Mon Dec 03, 2018 2:46 pm

The risk adjusted returns are why the economics, finance and other quantitative faculty at these universities have been complaining for decades that the schools should fire all their high priced investment managers and just index.

The universities claim that their various hedge fund, private equity, venture capital, timberland investments have low correlation with the market while offering great returns. The low correlation appears to be as unreliable as the great returns.

I suspect the problem is the influence of wealthy financier donors. If someone gets rich in the finance world and offers to give you $100 Million, provided you hire some high priced managers, it is hard to turn that down. Big donors have outsized influence.

Harvard's problem back then was not so much the risk of the endowment, but putting the rent money in the stock market. Since it has a lot of expenses, holding that money in a checking account would have meant giving up a lot of return. Of course, it would also have meant keeping it safe.

From the reporting at the time, it seemed that putting all that money in volatile investments was the idea of central university leaders, not the investment managers. It had been started some years before the crash. If I recall correctly, that decision was made under Summers, himself a famous economist, former Treasury Secretary and a man who has never been wrong in his life. Just ask him.
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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by dodecahedron » Mon Dec 03, 2018 3:01 pm

nisiprius wrote:
Mon Dec 03, 2018 12:18 pm
TomatoTomahto wrote:
Mon Dec 03, 2018 8:58 am
They have different goals than individual investors (ie, their horizon is perpetuity rather than double digit years). And thus, as surely as night follows day, their investments differ from individual investors.
Yes, that's what people say.

However, in 2008-2009 it transpired that Harvard had 80% of the funds in its General Operating Account invested in the endowment fund. Quite rather than being held for "perpetuity." Day-to-day bills were actually being paid out of the endowment fund. Thus, the crash caused layoffs, disrupted research programs for which funds had been promised, and caused a halt in a giant construction project for new facilities in Allston, which then sat for years with nothing but a colossal hole in the ground to show for it.

So, no, their horizon is not "perpetuity."
Indeed. In 2009, Harvard had to cut out hot breakfasts in the dining halls in the student houses and almost a decade later students still don´t have hot breakfasts available. (Yes, admittedly only 30% of students actually made it to breakfast, but those that do include quite a lot of national and international calibre athletes with early morning practices.) It seems outrageous that they can´t provide hot breakfasts to those who want it.

Although university endowment´s true time horizon ought to be long term, the fact is that their endowment managers have very short term horizons. If they do not perform, they are at risk for getting replaced in very short order. This may sometimes induce some Hail Mary ¨stupid pet tricks¨ moves on the part of the endowment managers.

Reading about the turnover in Harvard´s endowment managers since 2005 will give you whiplash.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by TomatoTomahto » Mon Dec 03, 2018 3:16 pm

Indeed. In 2009, Harvard had to cut out hot breakfasts in the dining halls in the student houses and almost a decade later students still don´t have hot breakfasts available. (Yes, admittedly only 30% of students actually made it to breakfast, but those that do include quite a lot of national and international calibre athletes with early morning practices.) It seems outrageous that they can´t provide hot breakfasts to those who want it.]
As you might recall, I’m a big fan of Yale’s, but there is at least one thing that I find wrong: they reduced the quality of the cafeteria food some years ago, ostensibly for budget reasons. AFAIK, they still had hot breakfasts. I have heard that they have recently addressed the food quality, possibly because more and more students are choosing to live in apartments, citing the food as one reason. Unexpected bonus: my son became quite a good cook during his two years in an apartment :D
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by garlandwhizzer » Mon Dec 03, 2018 9:13 pm

I think that one point is that portfolio returns are period dependent. Over 10 years a US balanced fund outperformed the sophisticated and expensive complex strategies of the Ivy League. Over 15 years the opposite happens. What will be the results over the next 10 - 15 years? I don't think the available evidence gives us a clear answer to that question. Complexity and brilliance may prevail or may lose the race to low cost simplicity. Is the market itself changing over time? Do the ever increasing money flows into complex strategies aiming to outperform (alts, factors, venture capital, private equity, options, active management in general) dilute the limited supply alpha they seek? Not sure, but it's a legitimate question.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by protagonist » Mon Dec 03, 2018 9:26 pm

TomatoTomahto wrote:
Mon Dec 03, 2018 3:16 pm
Indeed. In 2009, Harvard had to cut out hot breakfasts in the dining halls in the student houses and almost a decade later students still don´t have hot breakfasts available. (Yes, admittedly only 30% of students actually made it to breakfast, but those that do include quite a lot of national and international calibre athletes with early morning practices.) It seems outrageous that they can´t provide hot breakfasts to those who want it.]
As you might recall, I’m a big fan of Yale’s, but there is at least one thing that I find wrong: they reduced the quality of the cafeteria food some years ago, ostensibly for budget reasons. AFAIK, they still had hot breakfasts. I have heard that they have recently addressed the food quality, possibly because more and more students are choosing to live in apartments, citing the food as one reason. Unexpected bonus: my son became quite a good cook during his two years in an apartment :D
"U Mass Amherst Ranks No. 1 in Campus Dining for Third Straight Year". https://www.umass.edu/newsoffice/articl ... pus-dining
"The university will be among the schools featured live on NBC’s “Today Show” on Tuesday, Aug. 7 between 10-11 a.m. On the “Today Show” segment, a chef from UMass Amherst will present hosts Kathie Lee Gifford and Hoda Kotb with three popular dishes – sushi, mushroom blended chicken tikka sliders and local peach macarons. UMass Amherst serves about 4,000 hand-crafted sushi rolls a day, mostly made by student staff. The mushroom blended chicken tikka slider is so good it won a James Beard Foundation Award in 2017. And the local peach macarons are a student favorite."

I've eaten there once, and I was surprised to find how very good it was. Better than most restaurants in Amherst.
Perhaps that has something to do with receiving state funding vs. the vicissitudes of private endowment money. (laughing....)

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by 2015 » Mon Dec 03, 2018 10:49 pm

nedsaid wrote:
Mon Dec 03, 2018 12:36 pm
It is a problem of portfolio creep. One can start out with a simple and effective investment strategy but evolve into greater complexity because you keep learning more and want to apply what you learn. Doubtless, the folks on these endowment committees are bright people and don't want to miss out. Well, you know, that guy over there at Yale, David Swenson, made a bundle on alternatives and we ought to find out what he was doing. Or you read a compelling book or read the academic research. It is the fear of missing out that drives the more and more complex portfolios.

I know this because I have done this myself with investing styles and asset classes. It might be a personality quirk but I like trying out new things. If an idea or an investment makes good sense, I am inclined to try it out. I might be missing out on something. But what we find out if that markets are pretty efficient. Hard to beat those benchmarks.

Plus many of us don't get listened to as much as we like. We feel as though our creativity is stifled and one of the few areas we can express ourselves is with our investment portfolios. There is a bit of that too. Pretty much good old fashioned ego. My portfolio is my magnus opus. My masterpiece.
Very well said. FOMO, other behavioral biases, and ego never sleep, never cease to work their wickedness

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by averagedude » Mon Dec 03, 2018 10:53 pm

I think we should all be thankful that the big endowments dont index. They are helping the markets stay efficient.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by nedsaid » Mon Dec 03, 2018 11:10 pm

averagedude wrote:
Mon Dec 03, 2018 10:53 pm
I think we should all be thankful that the big endowments dont index. They are helping the markets stay efficient.
For once, the individual investor taking advantage of the stupidity of institutions.
A fool and his money are good for business.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by texasdiver » Tue Dec 04, 2018 11:43 pm

staythecourse wrote:
Mon Dec 03, 2018 9:14 am
Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.
Good point,, but the next sentence is MORE useful in regards to the outperformance being from PE and VC. If true then it is a nonstarter for retail investors as they don't even have access to that space.

Interesting, there is actually no way an instituition ca beat a retail investor if both just held a 60/40 portfolio (SP500/ TBM as example) IF both just used index funds (no negative alpha). The reason is costs. Mr. Bogle's CMH comes up here. They have to pay their staff's salary and money managers ON TOP of the cost of the bare bone ER of index funds. So they are 100% relying on alpha to overcome their much higher cost structure.
Of course they could beat a retail investor. They could fire all their staff and just dump their entire $10 billion portfolio into Blackrock like the TSP does. The TSP has over $500 billion under investment. The average Ivy endowment is what....about $10 billion? And most other non-Ivy institutions are much much lower.

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by staythecourse » Wed Dec 05, 2018 8:04 am

texasdiver wrote:
Tue Dec 04, 2018 11:43 pm
staythecourse wrote:
Mon Dec 03, 2018 9:14 am
Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.
Good point,, but the next sentence is MORE useful in regards to the outperformance being from PE and VC. If true then it is a nonstarter for retail investors as they don't even have access to that space.

Interesting, there is actually no way an instituition ca beat a retail investor if both just held a 60/40 portfolio (SP500/ TBM as example) IF both just used index funds (no negative alpha). The reason is costs. Mr. Bogle's CMH comes up here. They have to pay their staff's salary and money managers ON TOP of the cost of the bare bone ER of index funds. So they are 100% relying on alpha to overcome their much higher cost structure.
Of course they could beat a retail investor. They could fire all their staff and just dump their entire $10 billion portfolio into Blackrock like the TSP does. The TSP has over $500 billion under investment. The average Ivy endowment is what....about $10 billion? And most other non-Ivy institutions are much much lower.
Sure now tell me what ivy has done that over the last 100 years to see if the obvious response of yours has ever happened to guage the chance of it happening going forward.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by texasdiver » Wed Dec 05, 2018 10:06 am

staythecourse wrote:
Wed Dec 05, 2018 8:04 am
texasdiver wrote:
Tue Dec 04, 2018 11:43 pm
staythecourse wrote:
Mon Dec 03, 2018 9:14 am
Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?
The news wasn’t all bad for the Ivy endowments. Though the endowments didn’t beat a plain-vanilla portfolio over ten years, they did outpace it when looked at over the most recent 15-year period on an annualized basis.
Good point,, but the next sentence is MORE useful in regards to the outperformance being from PE and VC. If true then it is a nonstarter for retail investors as they don't even have access to that space.

Interesting, there is actually no way an instituition ca beat a retail investor if both just held a 60/40 portfolio (SP500/ TBM as example) IF both just used index funds (no negative alpha). The reason is costs. Mr. Bogle's CMH comes up here. They have to pay their staff's salary and money managers ON TOP of the cost of the bare bone ER of index funds. So they are 100% relying on alpha to overcome their much higher cost structure.
Of course they could beat a retail investor. They could fire all their staff and just dump their entire $10 billion portfolio into Blackrock like the TSP does. The TSP has over $500 billion under investment. The average Ivy endowment is what....about $10 billion? And most other non-Ivy institutions are much much lower.
Sure now tell me what ivy has done that over the last 100 years to see if the obvious response of yours has ever happened to guage the chance of it happening going forward.
Of course none of them have because endowments are part of the alumni grift. Ivies put $$$ into high-priced hedge funds and private capital run by alumni on the bet that billionare alumni financiers will return the money back in their estates. And its probably a safe bet.

But smaller non-Ivies have been successful and beaten the Ivies by going the low fee index fund route

https://www.bloomberg.com/news/articles ... ndex-funds
https://www.businessinsider.com/passive ... nts-2017-2

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Re: Big endowments don't beat simple 60/40 over 10 yrs.

Post by staythecourse » Wed Dec 05, 2018 1:20 pm

texasdiver wrote:
Wed Dec 05, 2018 10:06 am
staythecourse wrote:
Wed Dec 05, 2018 8:04 am
texasdiver wrote:
Tue Dec 04, 2018 11:43 pm
staythecourse wrote:
Mon Dec 03, 2018 9:14 am
Nate79 wrote:
Mon Dec 03, 2018 9:06 am
Why wasn't this quote the one that made the headline?

Good point,, but the next sentence is MORE useful in regards to the outperformance being from PE and VC. If true then it is a nonstarter for retail investors as they don't even have access to that space.

Interesting, there is actually no way an instituition ca beat a retail investor if both just held a 60/40 portfolio (SP500/ TBM as example) IF both just used index funds (no negative alpha). The reason is costs. Mr. Bogle's CMH comes up here. They have to pay their staff's salary and money managers ON TOP of the cost of the bare bone ER of index funds. So they are 100% relying on alpha to overcome their much higher cost structure.
Of course they could beat a retail investor. They could fire all their staff and just dump their entire $10 billion portfolio into Blackrock like the TSP does. The TSP has over $500 billion under investment. The average Ivy endowment is what....about $10 billion? And most other non-Ivy institutions are much much lower.
Sure now tell me what ivy has done that over the last 100 years to see if the obvious response of yours has ever happened to guage the chance of it happening going forward.
Of course none of them have because endowments are part of the alumni grift. Ivies put $$$ into high-priced hedge funds and private capital run by alumni on the bet that billionare alumni financiers will return the money back in their estates. And its probably a safe bet.

But smaller non-Ivies have been successful and beaten the Ivies by going the low fee index fund route

https://www.bloomberg.com/news/articles ... ndex-funds
https://www.businessinsider.com/passive ... nts-2017-2
Correct. The reason is LOW cost. So a retail investor has to beat the higher cost endowment fund if both are indexing due to their higher cost, i.e. CMH. That was the point of my post. It is a great illustration of it is IMPOSSIBLE if both are indexing passively for the larger endowment to beat Joe down the block if both are using index funds in a passive manner.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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