For years, America’s largest, richest and most prestigious universities ... churned out double-digit returns. ... An investment stampede ensued as other universities, giant pension funds and even individuals slavishly copied their strategy, which stressed diversification along with high-cost, often illiquid alternative investments like hedge funds, venture capital and private equity funds.
[But] data compiled by the National Association of College and University Business Officers for the 2011 fiscal year (the most recent available) show that large, medium and small endowments all underperformed a simple mix of 60 percent stocks and 40 percent bonds over one-, three-and five--year periods. The 91 percent of endowments with less than $1 billion in assets underperformed in every time period since records have been maintained. ...
I've been at this investing thing for awhile now, and what I've come to understand is:
The more comples and expensive your investment choices are, the LOWER your long-term returns.
I, personally, would run rapidly away from any high-octane investment counselor who was hot to put me into a lot of "go go" funds with big price tags. I've sprinted down that road before, and ended up the poorer for it.
And it's probably why today I tell anyone getting into the the TAG 401(k) Plan to think seriously about stashing all or most of their money into one of the Vanguard Target Funds -- ignoring the dates and focussing on the asset allocation. (For instance, if you want a 50/50 split of stocks to bonds, the 2010 Vanguard target date fund is a pretty good choice, just as Vanguard 2020 is good for a "classic" 60% stock 40% bond allocation.
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