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Alternative Market Briefing

Yale Endowment posts positive performance, focuses on alternatives

Wednesday, March 19, 2014

Bailey McCann, Opalesque New York:

The Yale Endowment, currently worth over $20bn posted another positive return year for 2013 with gains of 12.5%. The endowment is closely watched as a barometer of top endowment portfolio performance, in part because it maintains significant allocations to hedge funds and private equity. Spending from the endowment is up 8% over the last ten years, and is likely to continue going up providing some context around the recent announcement that tuition costs will go up at the school.

Even with this rise in costs, endowment assets have also grown over the same period from $11.03bn to $20.78bn. In a recent report, the endowment speaks directly to recent criticism that the portfolio's emphasis on active management and alternative investments has been risky and of limited value. To wit:

"While traditional asset allocations held up well during fiscal 2009 and in the immediate aftermath of the crisis, that short term outperformance came at a heavy cost to the growth of a portfolio's value over the long term. During periods when traditional portfolios outperform critics are quick to cast aspersions on the Yale model, but traditional 60 percent equity/40 percent bond portfolios are not diversified and ......................

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