Bespoke readers know that we are big fans of David Swensen. Mr. Swensen runs the top-notch Yale endowment fund and is also the author of Unconventional Success: A Fundamental Approach to Personal Investment. When Mr. Swensen speaks, we listen -- and everyone else should too.
This weekend's New York Times features an article asking Yale's Swensen what investors should do in the current market environment. Mr. Swensen's response:
Don’t try anything fancy. Stick to a simple diversified portfolio, keep your costs down and rebalance periodically to keep your asset allocations in line with your long-term goals.
In Unconventional Success, Mr. Swensen recommends that investors use ETFs to implement his asset allocation strategy. The keys to long-term results are diversification and rebalancing. Each asset class has a recommended portfolio weighting, and each quarter or so, the portfolio should be rebalanced by buying more of the assets that have gone down and selling a portion of the assets that have gone up. This strategy means that the portfolio is constantly selling at highs and buying at lows.
At Bespoke, we offer two ways for investors to implement an all-ETF asset allocation strategy. At Bespoke Premium, we have a Model ETF Portfolio that applies this approach. For each asset, we provide the recommended weighting (stocks-50%, bonds-25%, etc.) and invest in various ETFs within the asset class that we currently believe are the most attractive. The Bespoke Premium Model ETF Portfolio has held up exceptionally well during this market downturn, declining just 2.99% since inception last June while the S&P 500 has declined nearly 12%. For investors looking to take a more hands-off approach, Bespoke also offers a professional money management strategy using all ETFs that applies the same asset-allocation principles mentioned above. For more information, please visit our money management page.
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