David Swensen is the famed manager of the Yale Endowment Fund and has been able to generate a 16.3% annualized return during his tenure as fund manager. No easy feat considering that most active portfolio managers are unable to even beat the market.
I know I will never be the investor that Swensen is. His career is investing for the fund and spends each and every waking hour (at least working waking hour) thinking about how to invest the endowment fund’s money. I have another job and manage my portfolio in my spare time. That being said, as an individual dividend investor I know that I can learn from Swensen and did some digging around to see how he investors. There is a tonne of information on blogs and portals on the web so it was not hard to find.
The most important information in my opinion is the asset allocation he recommends to lay-investors like you and me. It is a simple to follow asset allocation and in my opinion anyone can follow it (not that you should of course – do your research). Here is the asset allocation he suggests:
If you want some more asset allocation choices, check out this post or this site. There are a million different scenarios out there. Pick one that meets your needs and stick to it. Your asset allocation is the most important part of your portfolio so pay a lot of attention to it.