Yale Outperforms Harvard Once Again
For the sixth year in a row, Yale's endowment has outperformed Harvard with its 3.4% investment gain.
These are the stats for Yale's Ivy League peers:
Harvard on Thursday said its investments declined by 2 percent, lowering the value of the largest fund in higher education by $1.9 billion to $35.7 billion. The University of Pennsylvania’s loss was 1.4 percent. More than a dozen university endowments with assets of more than $1 billion have reported investment declines as results come in over the next month.
While Yale's 3.4% gain has outperformed other schools, it is the university's second lowest return in a decade. Any thoughts on Yale's performance?
reading HBS case on Yale endows just now
Yale is closer to New York, IMO
I'm wondering why all of them are so low regardless of peer performance. Do they only invest in IG bonds? I also know 2016 had a rough start, but come on...
I am really not sure but I would expect endowments to deal with investment grade fixed income assets only.
This is not really correct. Endowments following the Yale Model (so Yale, Princeton, Duke, MIT, and others, but not Harvard) generally invest 25-33% in VC / PE, 33-50% in domestic equity, 10-20% in hedge funds, 10-20% in emerging market public equities, 10-20% real estate, and 5-10% fixed income / cash. I gave wide ranges because they can eac vary by large factors depending on the idiosyncrasies of the market and their ability to reinvest at their target allocation.
This is my experience from interning at a large university endowment, at least. If you want to learn more, read David Swenson's book, "Pioneering portfolio management." It's a great read for investors of all sorts, IMO.
EDIT: I'm leaving the above, but some of my numbers were a bit off. See the below link for a more accurate picture
http://princo.princeton.edu/about/investment-strategy/
Dear @cityandcolour ,
Thank you for sharing your experiences,
From what you have mentioned it looks like that portfolio breakdown is a very very volatile one, I have to say I am really surprised.
From my point of view I always thought that Endowments were only trying to sort of beat inflation while generating a little of capital gains and managing the cash of treasury needed to finance the university's operations and financial aid through money market instruments 80 % and 20% more risky investments. Sort of how insurance companies do.
However maybe the 25-33% VC you are referring to are to finance startups of the university's own Alumni? and the same for 10-20% of Hedge Funds?
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