The Ivy Portfolio

Foreword

Preface

Acknowledgments

Part One. Constructing Your Ivy Portfolio

Chapter 1. The Super Endowments

Endowments are Different

Size Matters..

and So Does Performance

Active Management Over Passive

Summary

Chapter 2. The Yale Endowment

History of the Endowment

David Swensen's Ascent

Of Alphas and Betas

Outlining the Yale Process

Domestic Equity

Foreign Equity

Fixed-Income

Alternatives

Summary

Chapter 3. The Harvard Endowment

History of the Endowment

The Owner's Mentality

Harvard's Swensen

More Money, More Problems

How Harvard Does It

Summary

Chapter 4. Building Your Own Ivy League Portfolio

Do As I Do - Shadowing the Super Endowments

Risk-Adjusted Returns

Do As I Say

Inflation is the Enemy

Creating an All-Weather Policy Portfolio through Indexing

Implementing Your Portfolio

Rebalancing Your Portfolio

Summary

Part Two. Alternatives

Chapter 5. Private Equity

What Is Private Equity?

Historical Returns and Benchmarking

How to Invest in Publically Listed Private Equity

Summary

Chapter 6. Hedge Funds

A Brief Introduction to Hedge Funds

Fund of Funds

Options to Invest in Hedge Funds

Individual Hedge Funds

Fund of Funds

Practical Considerations

Summary

Part Three. Active Management

Chapter 7. Winning by Not Losing

Losing Hurts

The Quantitative System

Out of Sample Testing and Systematic Tactical Asset Allocation

Extensions

A Rotation System

Practical Considerations and Taxes

Discipline

Blood in the Streets (Pop out?)

The Systems vs. the Endowments

Why it Works

Summary

Chapter 8. Following the Smart Money

Introduction to the 13F

Combining the Top Fund Managers to Create Your Own Fund of Funds

Summary

Chapter 9. Develop an Action Plan

Implementing Your Ivy Portfolio

Portfolios Mentioned in The Ivy Portfolio

Appendix A: A Brief Review of Momentum and

Mebane T. Faber, CAIA, CMT, is the Portfolio Manager at Cambria Investment Management where he manages equity and global tactical asset allocation portfolios. He is a frequent speaker and writer on investment strategies and authors the World Beta blog. Faber is also the cofounder of AlphaClone, an investing research Web site. ?Faber began his career as a biotechnology equity analyst and a quantitative research analyst. ?He graduated from the University of Virginia with a double major in engineering science and biology.Eric W. Richardson, JD, is the founder and CEO of Cambria Investment Management. He also serves as the President of the General Partner of Cambria Investment Fund, LP, a private investment partnership that makes bridge loans and structured equity investments in emerging-growth companies. He began his career as an associate with the law firm Milbank, Tweed, Hadley & McCloy. Mr. Richardson received a BA from the University of Southern California and a JD from the University of Michigan Law School.

"The most useful recent book could be The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets , by money managers Mebane Faber and Eric Richardson, who work at Cambria Investment Management. They analyze how the endowments of Harvard and Yale posted such world-beating performance. Then they offer a simplified model that regular people can adopt." ( BusinessWeek , April 9, 2009) "Markets left investors almost no place to hide last year, with nearly every asset class heading south. Money manager Mebane Faber of Cambria Investment Management outperformed by a mile, however... Faber is co-author of the The Ivy Portfolio , which details his approach. Following the investment tenets of the Harvard and Yale endowments (which until last year both had sterling performance) but without using their riskier alternative assets, he demonstrates how to outperform with lower volatility." ( Barron's , April 27, 2009) "Does The Ivy Portfolio deserve a spot on Dad's bookshelf? With its graphics, tables and step-by-step guidance, the book is often more straightforward than a college financial aid form." ( Wall Street Journal , June 16, 2009) "We all know that the most impressive investment returns are from endowment funds and in particular, Yale and Harvard. Faber and Richardson take us inside these two funds and show us how to replicate that model for our portfolios. The Ivy Portfolio is an easy-to-read and -understand book that will make the process of asset allocation and investment easier for readers. And in light of the recent market turmoil, its lessons are even more important." - John Mauldin , author of the bestselling Bull's Eye Investing and the weekly newsletter Thoughts from the Frontline "Meb Faber makes a most compelling case for quantitative active asset allocation. Investors of all levels of sophistication will benefit handsomely from the insights and analyses presented in The Ivy Portfolio." - Rob Arnott , Chairman, and Jason Hsu, Chief