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explains how an institutional investor (as distinguished from an individual investor) might achieve above-market returns. He observes there is little chance for beating the market with wellfollowed securities such as large cap and small cap stocks. As to opportunities available to the institutional investor from less conventional sources, Swensen writes: “Populated by unusually gifted, extremely driven individuals, the institutional funds management industry provides a nearly limitless supply of products, a few of which actually serve fiduciary aims. Identifying the handful of gems in the tons of quarry rock provides intellectually stimulating employment for the managers of endowment portfolios.” 2 Few, if any, individual investors have the time and skill to separate the “gems” from the “quarry rock,” even if they were presented with similar opportunities. Any individual investor who believes he or she can achieve above-market performance is almost sure to underperform the market substantially. Hardly any institutional investors are able to outperform their proper benchmarks. Among those who do accomplish this feat, their ranks largely change from year to year, making their discovery a moving target, as Mark Hebner shows in this volume. Swensen affirms the difficulty of identifying skilled fund managers. He states, “I erred in describing my target audiences. In fact, I have come to believe that the most important distinction does not separate individuals and institutions… few institutions and even fewer individuals exhibit the ability and commit the resources to produce riskadjusted excess returns.”3 Indeed, the challenge of ferreting out the gems from among

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