This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Follow Swensen's Yale Endowment Fund

I wrote about MVC Capital on Jan. 1 and while many names in the space like Apollo Investment Group (AINV), KKR Financial (KFN) and the PowerShares Listed Private Equity Portfolio ETF (PSP) have been down 25% or more over the last year, MVC is only down 10%.

That may not be much consolation, and figuring out when this group turns around could be very difficult to do.

Real Assets

"Real assets" takes in a lot of different things that are easily accessed and not that difficult, relatively speaking, to understand.

The first thing that comes to mind is probably commodities. There is no shortage of precious metals, industrial metals, grains and other soft commodities to choose from in ETF or ETN form.

Real assets are intended to protect against inflation, so a part of this segment would also be inflation protected securities. Some of the more well-known products include the

  • iShares Lehman TIPS Bond Fund (TIP)

  • Vanguard Inflation Protected Securities Fund (VIPSX)

  • StateStreet SPDR DB International Inflation Protected Bond ETF (WIP); this one is very new.

I think the real-asset segment offers the most potential for innovative new products.

One example is the Macquarie Pastoral Fund, which invests in cattle and land -- mostly in Australia. It doesn't trade on an exchange, but is available to U.S. investors. The fund is only a year old, and if it does well, there will be other products isolating disparate investment niches. That will create more opportunity for do-it-yourselfers to create their own endowment fund.

Is this something that do-it-yourselfers, or for that matter professionals, should even attempt?

The short answer is -- not exactly.

A friend of mine likes to say that none of us are David Swensen, and none of us have access to his Rolodex.

Still, everyday folks can access market segments that they previously could not, and the exchange-traded versions of these segments will improve over time.

That will give us the ability to construct more-sophisticated, and hopefully better risk-adjusted, portfolios by adding in a few of these sorts of things.

I believe the approach that makes the most sense is to add in one or two items from real assets and absolute return as diversifiers for an equity-based portfolio -- as opposed to Yale, which appears (albeit very successfully) to use equities to diversify a global macro hedge fund.
At the time of publication, Nusbaum was long TIP, WIP, MVC and RYMFX in client and/or personal holdings, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
TIP $115.07 0.34%
MVC $7.49 0.94%
WIP $54.34 -0.17%
AAPL $93.21 -0.44%
FB $117.80 -0.22%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs