Pioneering Portfolio Management Book Summary - Pioneering Portfolio Management Book explained in key points
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Pioneering Portfolio Management summary

David F. Swensen

An Unconventional Approach to Institutional Investment, Fully Revised and Updated

4 (34 ratings)
24 mins
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    Pioneering Portfolio Management
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    Endowments help institutions maintain their independence

    If you’re going to understand how to manage your institutional investments, you must first appreciate why investments, particularly endowments, are so important. But first, what do we mean by an endowment? 

    An endowment describes gifts given to a university by individual, or groups of, donors. For instance, in the nineteenth century, Yale University was given 96 acres of farmland by an alumnus. What makes an endowment special is that it is given with the understanding that the principal capital is not to be spent – only the interest. This means that the endowment is designed to financially support the university in perpetuity, for as long as the institution exists. And that is precisely what makes them so valuable. 

    Endowments ensure the long-term strategic independence of your institution. 

    All too often, when your institution requires financial support, you are forced to accept help from external sources. For instance, in the 1970s, many private American universities had no choice but to turn to the federal government for loans and grants. But the problem with this route to funding is that these external financial backers usually have their own agenda for your institution, and their help often comes with strings attached as to how you spend their money. 

    This means that the leaders within the institution may lose control over their own strategy in allocating resources. The federal money that was given to universities, for example, came with the requirement to implement new regulations across many different areas of the institutions. It also meant that many universities had to carry out research in fields in which the government wanted insight. 

    With an endowment, the donor may also stipulate which area of the institution they wish to see their financial gift go toward. For instance, many endowments are for the express purpose of providing financial aid for students. But because the endowment will be in place for decades, or even hundreds of years, the influence of the donor will inevitably decrease over time, and the university can use their endowments to ensure they remain free institutions that are free to direct themselves however they see fit, without outside interference. 

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    What is Pioneering Portfolio Management about?

    Pioneering Portfolio Management (2012) outlines how institutions can approach endowment and investments. It explores the different types of asset classes and describes differing approaches to portfolio management. 

    Who should read Pioneering Portfolio Management?

    • Investment beginners
    • University staff looking for a fresh perspective
    • business managers looking for a new angle

    About the Author

    David F. Swenson was an American endowment fund manager, investor, and philanthropist. He was Yale’s Chief Investment Officer for over three decades. 

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