Advice from Yale’s top endowment advisor

Unless you can afford the cost to get all the great advice of the Yale endowment fund, it’s best to keep your investing strategy simple, sayd David F. Swenson, who oversees the Yale fund, which has $22.5 billion in assets and earned 28 percent last fiscal year.

Swenson is profiled in NY Times and published a book of similar advice in 2005 — Unconventional Success: A Fundamental Approach to Personal Investment.

His portfolio would be 30 percent domestic stocks, 15 percent foreign stocks, 5 percent emerging-market stocks, 20 percent real estate and 15 percent each of Treasury Bnds and TIPS (Treasury inflation-protected securities). His ratio of domestic stocks is much lower than I’ve seen others recommend.

He says it is fruitless for individual investors to pick stocks. “There is no way that an individual can go out there and compete with all these highly qualified and compensated professionals.”

OK, maybe it is good advice, but if can earn 28 percent at Yale, many will try to actively manage to that, rather than the more auto-pilot approach.

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