Saturday, November 29, 2008
Videos will resume next week.
One of my RSS feeds had this from a site called TickerSpy about the ETFs (and a couple of individual stocks) owned in the Harvard Endowment. You can click here for the full list which includes position size. The ETFs are all either broad based (like IWM, EEM, VWO) or iShares single country funds (like Brazil, Taiwan, South Korea and India--that one is an ETN).
Eyeballing the list these holdings total $2.3 billion out of about $36 billion so I'm not sure how much this tells us about overall positioning. The article makes it seem like this is a portfolio withing the endowment (maybe I have that wrong though). If that is correct then I am surprised there are no sector decisions expressed. Clearly many ETFs would be difficult for Harvard to access due to the endowment fund being too big (a couple of the positions are close to half a billion) but I'd think that iShares and the Sector SPDRs could accommodate.
This is a potential advantage a do-it-yourselfer has over the endowment. If you deem a narrow based ETF with only $30 million in assets trading $75,000 dollar volume per day as the best way to capture a given sector you can buy that fund pretty easily. There is obviously risk of that fund closing but a fund that closes for lack of interest is not a total loss. It doesn't necessarily have to be a loss at all. If the market was up 30% this year then most of the HealthShares that are being closed would also be up but probably still be closing for lack of interest.
Chances are we do not have the advantage over an endowment in terms of brainpower but in terms of executing what we think is best for our own portfolios we do.
It is interesting to see ETFs being used at all in any endowment. It is a good bet there will be more about this as more and more big pools of capital use ETFs either to capture the market, actively manage with passive tools or just passively manage their funds. This is great for learning how but not for mimicking.
One last point is that in looking at the list there are 15 holdings; 10 ETFs and 5 individual stocks. This is an example of a point I have made before. An individual may not want to do the work or take the risk of owning 20 or 40 or 60 individual stocks but using a bunch of ETFs with a few individual stocks mixed in is something many people are capable of doing.