More Than Stocks: Don’t Neglect These “alternatives” When Thinking About Your Portfolio

In his book “Pioneering Portfolio Management”, Swensen describes the process that is making the Yale endowment the most successful strategy in investing. Most investors think in terms of equities, but we’ve known since the 50’s that the more types of risks and asset classes included in a percentage based portfolio, the more resilient and potent the returns are from re-balancing and hedging. With the shiller-PE near 34, it’s more important than ever to remember that “diversification” isn’t just for what (US) companies to own.

Many investors make the mistake of valuing their portfolio in their home currency without accounting for currency risk. They may own US equities, while valuing their portfolio in Euros, and will have seen dramatic declines during the latest bull run. In the past, paying 3-6 basis points (a point is .01%) for a currency forward was the purview of high-net-worth individuals (HNWI), but today the FX … Read more