Universities and other institutional investors have long time horizons because they expect to exist forever. Source – The Yale Investments Office Swensen was an early investor in private equity, which helped drive long-term returns. 2020 Press Release. 2017 Press Release. In 1718, Elihu Yale sold a portion of his collection of gems and furniture to provide an initial fund of £562 for the establishment of the school's endowment. Have a confidential tip for our reporters? Brown University ranks at top with 12.4% gain in fiscal 2019, Several rival schools will report investment results soon. The endowment was established at Yale University, then Yale College, in 1718 from an initial fund of £562 provided by Elihu Yale and has grown to more than $30 billion in value over the ensuing 300 years. 2015 Press Release. Yale, led by chief investment officer David Swensen, had a sizable allocation of its fund in foreign equities in 2018, at 15.3%, as did other big endowments. The university uses a system that most schools and investors would not be able to maintain because of the lack of funds compared to that of Yale.

The New Haven, Conn., college’s endowment totaled $20.8 billion as of June 30 and is closely watched for changes in its holdings of stocks, bonds, hedge funds, private equity and other investments. “Nearly 80 percent of Yale’s out performance relative to the average Cambridge Associates endowment was attributable to the value added by Yale’s active managers, while only 20 percent was the result of Yale’s asset allocation.” (Source). [7] Spending from revenue earned off the endowment accounted for $1.2 billion of the university's operating budget in 2017. The school put only 3.5% of its fund in U.S. stocks. Yale’s private-equity portfolio has generated a 14.4% annualized return in the past decade, ranking it as one of the endowment’s best investments, according to a preliminary report issued in September. [2][3] The endowment was established at Yale University, then Yale College, in 1718 from an initial fund of £562 provided by Elihu Yale and has grown to more than $30 billion in value over the ensuing 300 years.

(Full disclosure, I’m a Yale graduate.) [12] In 2015, Swenson earned $4.5 million, making him the highest-paid employee at the university, surpassing the compensation of even university president Peter Salovey. The Family Office Club is the #1 largest membership-based community of family office professionals. Mr. Swensen is notable for inventing The Yale Model, which is based upon the principles of Modern Portfolio Theory.

In the last year Yale university has reallocated many funds to further the profit.

[4][5] Since 1985, the Chief Investment Officer of Yale has been alumnus David Swensen.

The Yale University endowment (valued at $30.3 billion as of 2019) is the world's second-largest university endowment, after the Harvard University endowment, and has a reputation as one of the best-performing investment portfolios in American higher education. Mr. Swensen decided to change asset allocation towards riskier classes. 2018 Press Release. [10][11], Beginning in the early 2000s, some criticized the size of compensation given to the endowment's managers. Totaling $30.3 billion on June 30, 2019, the Endowment contains thousands of funds with a variety of purposes and restrictions. Over that decade, the index appreciated by 160% (including the effects of dividend reinvestments), while Yale's endowment portfolio rose by 104%. With over 1,500 registered family offices we have more billionaire family offices, centimillionaire families, and single family office members than our top two competitors combined. Yale University campus in New Haven, Connecticut. (Source). © Copyright 2018 by Endowments.com. Before it's here, it's on the Bloomberg Terminal. “[Yale Investments Office] cut the endowment’s target exposure to private equity to 31% of assets for the fiscal year (2013)… Yale Investments Office also reduced its targets for real estate, while increasing allocation targets for hedge funds, foreign equities and natural resources.” (Source). Over a 30-year timeframe, the returns are even higher and stand at 12.9 percent. In December 2018, after years of criticism from campus fossil fuel divestment groups, Yale University arrested 48 student activists for staging a sit-in at the Yale Investment Office to protest Yale’s holdings in the fossil fuel industry and Puerto Rican debt. Domestic equities is a mere 2.75%. Yale Investments Office also reduced its targets for real estate, while increasing allocation targets for hedge funds, foreign equities and natural resources. The following chart illustrates the change in asset allocation over the last three decades. According to him, Yale’s portfolio was overly conservative and under-diversified upon the beginning of his supervision. Investment return of 12.3% brings Yale endowment value to $29.4 billion Yale’s endowment earned a 12.3% investment return (net of all fees) for the year ending June 30, 2018. More top schools will post returns in coming weeks. It is managed by the Yale Investments Office. The Yale University endowment (valued at $30.3 billion as of 2019)[1] is the world's second-largest university endowment, after the Harvard University endowment, and has a reputation as one of the best-performing investment portfolios in American higher education. Our industry leading website (FamilyOffices.com), a weekly podcast on iTunes, newsletter, webinars, quarterly events, and authored the bestselling book in the industry is what drives membership. 2. Background on the Yale University Endowment Fund: Yale University uses a very specific model when it comes to investing for their endowment fund, this is known as the Yale Model. Even though this decision added risk to the portfolio, the additional returns well compensated the increase in overall market risk. Although these measures helped reduce market risk, assets as a whole seemed to not have been performed adequately and efficiently over the long-term. 2016 Press Release. This model is seen as very controversial, as well as it is very difficult to replicate without the correct amount of funding, like those funds that are received at Yale. Most of Yale University’s funds come from donors giving for specific areas within the university. That nearly 25 percent loss was considerably worse than the average endowment, which lost 18.6% over the same period. Over 20 years, it’s averaged 11.4% gains. [6], As of September 2019, the endowment was valued at $30.3 billion. [15], world's second-largest university endowment, List of colleges and universities in the United States by endowment, "Investment return of 5.7% brings Yale endowment value to $30.3 billion", "Yale Endowment Blasts Low-Fee Critics, Says Gains Would Lag", "The Money Management Gospel of Yale's Endowment Guru", "Investment return of 3.4% brings Yale endowment value to $25.4 billion", "How to invest like ... Yale University's £20bn fund", "What Yale Invested in to Almost Double Its VC Dollars Every Year", "As Budget Woes Grow, Some Want To Tax Yale's Endowment", "Tax Yale's Endowment? [1] Since the mid 1980s, the endowment has generated annual returns for the university of approximately 12.6-percent, with a portion of the annual return forming part of the university's operating budget and the remainder reinvested to grow the size of the endowment. Yale’s endowment lost 24.6% in its fiscal year ending June 2009, posting its first negative return in twenty years. Contact Details:  For complete contact details for the Yale University Endowment Fund investment staff please access your copy of our Endowment Database. [8] As of 2016, its venture capital investments had averaged 93-percent returns over the preceding two decades. (Source), 3)  The modern style of institutional investing can be traced to Yale University’s David Swensen, who literally wrote the book on the subject.

Record 200 Days With No Local Case Makes Taiwan World’s Envy, Walmart Pulls Guns Off Shelves as Precaution Ahead of Election, S&P 500 Rebounds to Post Biggest Gain in Two Weeks: Markets Wrap, U.S. Economy’s Path Less Certain After Record Quarterly Growth, Apple Shares Fall After IPhone Sales Miss, China Drops 29%. Assets Under Management:  $20.8 Billion ( Source: Yale Investments Office). They can improve a portfolio’s performance through a combination of high returns and diversification benefits. All Rights Reserved. In the last 20 years, the Yale endowment fund has made an annual return of 12.6 percent.

Yale University was founded as "the Collegiate School" in 1701.

Savers are paid to take risk. [10] The university objected, in part, on the grounds that such a move would be a violation of the tax exemption guaranteed to the university by the Colony of Connecticut in 1745. [1], The endowment has become known for seeking out "unconventional assets" and for investments in emerging businesses.



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