Mark Miller

An Endowment Portfolio From Publicly-Traded Vehicles

Paul-

Not to confuse things even more but what about throwing Icahn's American Real Estate Partners (ACP) into the Private Equity mix? Don't be fooled by the name. Buys distressed properties of all types.

An Endowment Portfolio From Publicly-Traded Vehicles

Machine-

I have a portfolio optimizer that can handle 20 positions but nothing like the 10K you are envisioning!

Re HSGFX, it is decidedly a growth fund but the strategy makes the volatilty better than an absolute returns fund's (10%). In fact the SD=4 and the R2 is 6 according to Morningstar. I own the fund as a proxy for CASH upon the firm belief that in the event of a market dowturn the underlying holdings will outperform (no junk) and the hedging will cause a very positive return, much like last time. If it doesn't then the strategy is decidedly a loser. Similarly, I use HSTRX as a substitute bond holding. Value is found in this environment only in TIPs I believe (Grantham agrees) and the fund's hedging by timing in and out of gold shares has produced good returns. The trouble is, with all these things, the TIMING of outperformance.

I see you have found PCL and RYN as proxy Timber exposures. I think the substitute is likely not a "clean" one but Limited Partnerships are the only other vehicle I know of.

An Endowment Portfolio From Publicly-Traded Vehicles

Paul-

I referenced TAVFX, Marty Whitman's fund, as being a proxy for Private Equity. He as much says so in his client letters, and his historical returns (16% LOF) are very similar to PE's. His fund doesn't normally achieve control but it does work at exit strategies. Above, you have it placed in the Absolute Return category.

Thanks for your work on this.

An Endowment Portfolio From Publicly-Traded Vehicles

One other thought. Any comments about Jeremy Grantham's assertion that Private Equity and hedge funds are the same beta sources as traditional ones, just gussied up with extra fees?

An Endowment Portfolio From Publicly-Traded Vehicles

Paul-

Thanks. Good ideas that I will look at. For Ken Heebner fans, you could do a lot worse than CGMRX for your real estate holding. He makes big bets but they do seem to pay off. Perhaps you could slice and dice the total holding here if Heebner makes you squeamish: 70% an ETF and 30% CGMRX or some such. My bet is that Heebner adds alpha over time.

ACAS is a favorite of mine. Also, the way Marty Whitman buys companies and debt, you can make a case that his fund (TAVFX) is very similar to PE.

An Endowment Portfolio From Publicly-Traded Vehicles

Gentlemen-

Some very good comments here. Re DIAMX, this fund also has a 5% load. I do not know of a no load version. Re individual stocks as Private Equity, I have toyed with the notion also and came across LUK as a proxy combined with GS. GS has done very well this cycle. As values revert and there are more bargains, I would expect LUK to pick up the slack. Low R2 in these stocks as well. Comments?