By Scott Ronalds

Canadian Capitalist, a prominent financial blogger, recently posted a glowing book review of David Swensen’s Unconventional Success: A Fundamental Approach to Personal Investment.  CC followed up the review with another posting today (How to Pick a Winning Mutual Fund), in which he highlights some of the attributes that Swensen encourages investors to look for in a fund manager.  These include: treating investors’ money as their own, looking for managers that invest significant portions of their wealth in their own fund, concentrating their portfolio in their best ideas, and charging low fees, among others.

We couldn’t agree more.  In fact, as longstanding readers of our blog may be aware, it was Unconventional Success that was a driver for the creation of Steadyhand.  In the book, Swensen voices a lot of his ‘beefs’ about the mutual fund industry that we share.  Most notably, he criticizes bloated portfolios, high turnover, poor alignment of interests (between investor and manager) and excessive fees as being all too common. 

There are many pearls of wisdom to take from Swensen’s book, which is also at the top of our must-read list.

Mutual funds (and active management) draw plenty of criticism from a lot of industry observers, including Swensen and Canadian Capitalist.  We don’t disagree with much of this criticism; rather, we’re out to change it.  When some of Mr. Swensen’s above-mentioned concerns are addressed, active management can be a beautiful thing.