Endowment manager here.
An endowment is a huge block of capital that was donated to universities and other non-profits, so that the proceeds could fund important programs such as a mathematics chair.
We have one job. Grow, grow, grow that endowment! We must optimize for absolute maximum growth over a LONG-term horizon.
And, because of our social responsibility, there is close legal scrutiny on how that money is handled, by the state attorney general. The relevant law is UPMIFA (Uniform PRUDENT Management of Institutional Funds Act). The funds are not to be gambled.
So endowment managers tend to make endowments look like (more or less):
- 70% domestic stock funds
- 10% foreign stock funds
- 10% bonds
- 10% more "interesting" investments
An endowment that invests like that is not going to have any legal trouble, even if the domestic stock market crashes. Because this kind of asset mix is the most reliable (prudent) choice.
It is invested like that because "growth" and "volatility" are a matched set. The tendency to burst in value or crash, that is volatility. Assets with the best growth also have the most volatility. So you need to tolerate volatility, which, fortunately, endowments do very well.
Did you notice that it looks exactly like your 401K's "2065 fund"? Yeah. There's a reason for that. Competent investment managers believe that is the best growth option available for long-term growth.
Because when the target is 2065, short-mid term volatility is not a factor. If the stock market crashes for 10 years, a 2065 fund doesn't care, because it can wait it out.
Now in a closer-in fund like a 2030 fund (target 8 years), you have a problem: a 10 year depression in stock prices could be devastating as there is no time to recover. As such, in the 20 years before target, these funds slowly move out of stocks and into "safe" investments like bonds. A 2025 fund is probably mostly into bonds at this point.
If you want to listen to experts...
read John Bogle's book "Common Sense on Mutual Funds". It dispels the myth that a genius stock picker (or a self-investing sophomoric person) can "beat the market" with skill, or with anything other than dumb luck, which doesn't scale.
If you still want "max growth" despite the volatility risk...
then simply select the Vanguard 2065 fund, or whichever longest fund is available. You'll be investing in lockstep with typical university endowments, which are absolutely invested for max possible (reliable) growth.
If you don't want to listen to experts...
and want to prove that Bogle is wrong...
then split your investment. So part of it goes into a 401(K) and part goes into an IRA.
IRA's (even Vanguard ones) have far more versatile investing options... and with good accountants or legal, you can put some truly loopy stuff into an IRA.
So, use the IRA to "fill in the gaps" in your portfolio that you seek to fill.
If that is not enough, and you want to counteract the 2065 Target Fund investments, then short it in a non-retirement investment account, as a hedge. Short it, while also doing the other trades you think are a better investment. That's kind of neat, because that account alone will prove your own genius or folly. If your individual stock picking beats the target 2065 fund, the net value of that account will increase. If your stock picking underperforms the target fund, this account will lose money. And we will see!