In-depth analysis on Credit Writedowns Pro.
Should FIFAA Be Red-Carded?
Absolute Return Letter, November 2015
“When I want your opinion, I will give it to you.”
Samuel Goldwyn
No, I haven’t gone bonkers – the focus of the Absolute Return Letter has not all of a sudden switched to football. Nor have I lost the ability to spell correctly, although I am sure that there are one or two like-minded readers out there who would also like to see the rear side of Sepp Blatter one final time.
FIFAA is an acronym that stands for Flexible Indeterminate Factor-based Asset Allocation and is the brainchild of Harvard Management Company’s President and CEO, Stephen Blyth. Harvard Management Co. (HMC) manages Harvard University’s endowment and related financial assets, a total of almost $40 billion, and has underperformed their chief ‘rivals’ at Yale University pretty much every year since the financial crisis changed everything in 2008. This is obviously not particularly satisfying, and HMC has now taken action, but is it appropriate action?
The following is not about Harvard per se but about what I believe to be an appropriate approach to investing in what is rapidly turning into a very different – and very difficult – investment environment. I remain convinced that if you want to succeed as an investment manager post 2008 you must approach portfolio construction very differently.