Thanks for the article Tiger. However, I think it pays to be...

Thanks for the article Tiger. However, I think it pays to be somewhat skeptical about Swensen's apparent 'Midas touch', particularly when the comes to this excerpt:

Since Swensen's arrival in 1985, Yale's endowment has generated net investment returns that average 16.1 percent per year. "For the last 20 years, no educational institution has a better performance record than Yale," Swensen says, matter-of-factly.

Clearly when comparing the investment funds of a large series of educational institutions, there will be a broad spread of performance: by pure chance, some will have very poor long-term records, others will be mediocre, and some will have excellent records. Of them all, of course, one will have the best record (i.e. Yale), but we should be wary of attributing this success entirely to its investment manager, considering much (if not all) of its success has been due to luck.

Likewise, it would be foolish to presume that a managed fund's good track record is all thanks to its insightful managers. Rather investors should realise that by pure chance, some funds will do brilliantly and others will do poorly, and that predicting the winners and losers is impossible.

The only way we can ensure our fair share of market returns is by investing in a low-cost index fund or well-established LIC.