Is Yale’s David Swensen Horrible for Investing?

An article in Institutional Investor offers an in-depth discussion of the Yale University endowment investment model created by David Swensen, who has overseen the portfolio for over three decades, and the impact it has created in the nonprofit world. The article describes Swensen, the esteemed university’s chief investment officer for nearly 35 years, as the “architect” of the Yale model who has “raised an entire generation of endowment CIOs in his image,” but adds that… Read More

Yale Enlisting Help from Endowment Chief for New Master’s Program

Yale is turning to its longtime endowment CIO David Swensen to help develop the next generation of asset managers by teaching in its new master’s program. This according to a recent article in Bloomberg. Swensen, who has run the school’s $29.4 billion endowment since 1985, will teach in the one-year program starting in the 2020-2021 school year (with a class of 20-25 students), according to program director Tobias Moskowitz. “Yale is among universities capitalizing on… Read More

Yale’s Endowment Fund Lagging the S&P 500

Although Yale University’s endowment fund—and its chief investment officer, David Swensen—have enjoyed a stellar reputation in the industry for decades, a recent article in Morningstar argues that the fund’s reputation “owes to its earlier accomplishments” and that, recently, it has been outperformed by the market. By creating a portfolio of securities that behave like the S&P 500, the article’s author, Morningstar columnist John Rekenthaler, says he “blitzed Yale’s fund over the trailing decade” (except for… Read More

Comparing Strategy Performance of Bernstein, Swensen, Browne and Swedroe

An article in Wealthmanagement.com compares the performance of four financial gurus by outlining a simulation of their signature portfolios “using readily available index funds and grantor trusts, annually rebalanced from September 2005 through July 2018, and put them up against a classic ’60/40′ portfolio of U.S. stocks and broad market bonds”: The data shows that, over the past 13 years, the approach of David Swensen (who has been chief investment officer at Yale University since… Read More

Yale Says its Endowment “Crushes” Indexes

The 2017 Yale University annual report argues in favor of active management strategies used by the investment offices of the country’s ivy league schools, according to a recent article in Institutional Investor. In the report, Yale rebuts Warren Buffett’s suggestion–stated in his 2016 letter to Berkshire Hathaway shareholders, that endowments and other institutional investors would be better off investing in an index like the S&P 500—by claiming that the top ten U.S. university endowments “amaze,” and… Read More

Yale Endowment Learns Lesson on Diversification

Strong long-term performance has made the Yale University endowment fund—with a mere 4% weighting in U.S. stocks and heavy allocations to alternative investments– the widely accepted diversification model, according to a recent article in Barron’s.  In the last ten years, however, the approach hasn’t worked so well. The fund has “lagged the U.S. equity market amid one of the great bull runs in history,” the article says, adding that a buy-and-hold investor in the S&P… Read More

Swensen of Yale Endowment: Low Market Volatility a Worry

David Swensen, chief investment officer of Yale University’s endowment fund, is concerned that low market volatility could lead to another market crash, according to a recent Bloomberg article. During his remarks at the Council on Foreign Relations in New York earlier this month, Swensen said, “When you compare the fundamental risks that we see all around the globe with the lack of volatility in our securities markets, it’s profoundly troubling.” According to the article, Swensen’s… Read More

Swensen’s Yale Endowment Model Not a One Size Fits all Investing Approach

The evolution of Yale University’s endowment fund has become something of legend, as described in a recent article in Chief Investment Officer. In the mid-80’s, as the story goes, the Ivy League university’s CIO David Swensen shifted the $25.4 billion fund from a traditional mix of primarily bonds and a few equities into “carefully selected alternative investments—hedge funds, private equity, and venture capital—using external managers to capture the so-called illiquidity premium.” It was a good… Read More

David Swensen: The Gatekeeper of Yale’s Endowment Fund

At $25.4 billion, Yale University’s endowment fund is one of the largest in the country. Since 1985 (when it totaled $1 billion), it has been overseen by David Swensen, described in a recent New York Times article as “legendary” in this role. Throughout his tenure, the article states, Yale has built one of the “strongest records among the nation’s largest endowments.” According to the Times, Swensen has “pioneered an investment strategy that expanded Yale’s portfolio… Read More

Learning from Swensen’s Success at Yale

Yale’s endowment fund has performed exceptionally well under David Swensen, returning an average of 10% per year since 2005, beating all major stock indexes and all but 2 of Morningstar’s mutual fund categories. Morningstar’s John Rekenthaler suggests that this outperformance comes from Swensen’s unconventional choices, but quickly quickly parrots Swensen’s advice to individual investors: “don’t try this at home.” So what can we learn from Yale’s success? Rekenthaler identifies a few possible lessons from Yale’s… Read More