Review: Smart Portfolios by Robert Carver

By Adam Jusko,,

Here at Proud Money we usually focus on personal finance topics and books for the average person. This review is for the more sophisticated investor. Smart Portfolios, by Robert Carver, “is intended for professional investors worldwide, including financial advisors, private bankers, wealth managers and institutional funds, as well as experienced private investors.” If you’re just trying to figure out which index mutual fund to choose for your IRA, this book is probably overkill for you.

That said, Smart Portfolios introduces plenty of concepts that anyone should follow in thinking about how to structure their investment dollars:

  • Taking a top-down approach, figuring out the proper allocation of equities and bonds in your portfolio before deciding on individual purchases.
  • Diversifying in a way that makes your portfolio less risky (without hampering returns too much).
  • Keeping a keen eye on the costs associated with purchasing and maintaining your holdings.
  • Understanding your need (or not) to have your performance track with market benchmarks to avoid embarrassment.
  • Rebalancing your portfolio to be true to your original goals.
  • Keeping tax implications in mind when making investment decisions.

However, Carver is going further in technical terms than the average investor is likely to want to follow. Most of us aren’t going to the lengths of figuring Sharpe Ratios to find the (hopefully) perfect place where returns are maximized and risk is minimized. Most of us will never invest in a hedge fund.

But some of us will, especially if we have many investment dollars to put to work or we are managing others’ money and the stakes are higher than just screwing up our own accounts. For those people, Smart Portfolios makes for a valuable read, because it always brings you back to the practical, macro-level questions (what to invest in, how much to invest, when to make changes) instead of going so far down the rabbit hole that you forget why various formulas or charts are relevant.

Carver’s pedigree and current status make him the right author for this type of book. He was a portfolio manager for one of the world’s largest hedge funds (AHL) but today is retired from the industry and is investing his personal portfolio, presumably using the concepts detailed here.

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