Pragmatic Observer

An Endowment Portfolio From Publicly-Traded Vehicles

DIAMX is available with no transaction fee at Charles Schwab and TD Waterhouse, among others. They do have a $10,000 minimum investment. Schwab also has a long-short fund (SWHEX) which has actually outperformed DIAMX year to date (DIAMX; -0.7% vs SWHEX; +5.0%) and ANGLX (+3.94%). DIAMX has the better long term (3+ years) return. ANGLX has the lowest fees (1.31%) with Schwab having the highest (1.76%).

Since Private Equity is the most difficult asset class for the average investor to access, here are a couple more alternatives to consider.

MVC (up 39% YTD with a PE of 6.5); CSWC (up 38% YTD with a ROE of 31.3); ACAS up 45% in one year with a yield of 5.6% and a PE of 7.8); TICC (up 27% in one year and yield of 8.6%) along with MIC (up 70% in the last year and a yield of 4.9%) are all involved in private equity purchases and financing. Any thoughts on these?

Swensen also includes investments like natural resources, timber, and other commodities in his Real Asset grouping. DJP and GSP are excellent ETF choices. GSP is more heavily weighted in oil and gas. You could include a mutual fund like US Global Resources (PSPFX; also heavy on oil and gas) which is up over 15% YTD, or Vanguard Raw Materials ETF (VAW) up 31% in the past year. In the Real Estate group Alpine International Real Estate mutual fund (EGLRX) has outperformed the US market this year (+13.1% vs ICF down 3.7%) and the international real estate REIT (RWX) which has returned 8.2%.

As always, it is important to understand that while these alternative asset classes have done very well in the past few years, they will not always lead the way. Nonetheless, they have done MUCH better than the US markets, which everyone is all excited about now, and do offer excellent diversification options along the lines that Swensen recommends.

Just a few ideas. Any comments or suggestions?