The Big Picture for the Week of November 30, 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.

6 Comments

  1. It’s easy to be critical. We should look at our portfolios in the same vein. So given that, I wonder why they have LEN & WY in their portfolio? A housing stock and a stock that is tied to housing and the paper business. We all know what’s happening to housing so I’ll address paper. Traditionally, the paper and print industry does poorly in a recession. They are actually two of the leaders into recession and two of the first to lead us out. To name several, look at what LPX, IP, SPP & RRD have done over the past six months. IP is at a level not seen since the 80’s. But keep an eye on them. If the past is indicative, they will show us the way out.

    Reply
  2. I wonder of they have WY for the timber acreage. that would be odd given they can own land directly but so too is the inclusion of the stock.

    Reply
  3. Farmland collapsed from $6000/ac. to $2000 in Iowa…..along with commodity prices. One should have been hedged. I suggest commodities will recover before farmland.
    Which is worse? Paying CG tax on profits or suffering a 40% decline in a portfolio? Neither I think.Is cyber trading compatible with any investment, conservative or not. Is it worth it? MIC was on my list as a ‘conservstive’ choice. That makes a good argument for finding alternate investments than equities unless of course you steal it….as we are discovering daily the risk/reward ratio of that….in the investment world!

    Reply
  4. MIC more than doubled in 5 days. Is it done imploding?

    Reply
  5. Roger,

    Maybe sorta OT; maybe not, but a while back I recall reading an article about the use of ETFs by hedge funds (I know that endowments are not typically considered “hot money” like the hedgies, but maybe the same line of thinking is at work here).

    As an example, if a hedge fund decides the energy sector is due for a rebound, according to whatever models/methodology they use to make those type of determinations, they might take half the money allocated and buy an ETF, and then dig through the sector, researching the “best buys”, and allocating the balance to those picks. That way, if the rebound is a sharp one, they’re at least partially exposed to the sector, and capture the first 5, 10, 15% of the bounce, rather then waiting until doing their DD on individual stocks.

    Makes sense to me..

    Reply
  6. Roger,
    FWIW, I read one of your recent Green Faucet articles and in my opinion you may want to consider placing the SDS position back on between SP 950-1.050 as we may not get a rally back to the 1,100 level. Best of luck!

    Reply

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The Big Picture for the Week of November 30, 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.

Submit a Comment

Your email address will not be published.

WP-SpamFree by Pole Position Marketing