Swensen Six and Faber “Ivy Ten” Portfolios

Two model portfolios to consider using are those recommended by David Swensen, chief investment officer of Yale University and author of Unconventional Success, and Mebane Faber, portfolio manager at Cambria Investment Management and co-author of The Ivy PortfolioWhile Faber's book focuses on Ivy League portfolios, there are differences in the make up of the portfolios recommended by Swensen and Faber.

The small investor needs to recognize that universities like Princeton, Yale, and Harvard have access to professional money managers and investment vehicles that reside outside our sphere of accessibility. We do not, for example, have access to private equity as does Yale.  I've been told many times, if you cannot employ a top quartile hedge fund manager, forget it.  Faber  bridges this gap in his recommendations.

Before moving into the differences and similarities between the "Swensen Six" and "Faber Ten," permit me to digress and address the Faber Five.  I will quickly mention that Eric W. Richardson co-authored The Ivy Portfolio, and he needs to be given proper credit.

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The Top Five Investment Books On Asset Allocation

Investors interested in digging deeper into the nuances of asset allocation will find the following five books of interest. Here is my revised list of the five best books on asset allocation.  Elsewhere on this blog you will find my Top Ten list of investment books.

  • The Four Pillars of Investing: Lessons for Building a Winning Portfolio – William J. Bernstein
  • Asset Allocation: Balancing Financial Risk – Roger C. Gibson
  • The Investor's Manifesto – William J. Bernstein
  • The Power of Passive Investing – Richard A. Ferri
  • What Wall Street Doesn't Want You To Know – Larry E. Swedroe

William Bernstein, of Oregon, is the author of my number one and number three picks. Actually, The Intelligent Asset Allocator, his first book, is my favorite (not on this list), but I would not recommend it as the first to read.  The five listed here are easier to read.  If you are unfamiliar with the language of asset allocation the Top Five will get you started.  Begin your journey with The Four Pillars. Roger C. Gibson, in his Asset Allocation (number two pick) book does a remarkable job of showing why one should build a diversified portfolio. However, I am still waiting for an author who will provide compelling data for using over ten different asset classes. Ferri's book, The Power of Passive Investing replaces his Asset Allocation book. 

Since I first wrote up this list of five books, Bernstein came out with his third book, Investor's Manifesto, and that book replaced Mark T. Hebner's book.  Hebner provides one of the best overviews for passive or index investing. In his Index Funds book, Hebner goes into the history and research for this approach to investing. If cost is an issue, this book is a best buy as it is online for free.  I also recommend visiting the IFA web site as it is one of the very best available. I provide a link off to the right under “Links.” Larry Swedroe fills out this list of outstanding Asset Allocation books.  My one complaint about Swedroe's book is that it does not have an index. If anyone has a favorite book on asset allocation, please add it to this list under the comments section. Your contributions are most welcome.

Lowell Herr Photograph: Lima, Peru students taking a snack break.