Copying David Swensen’s Endowment Model at Yale

At most billion-dollar endowments for American colleges and universities up until the early 2000s or so, the only question was: “What percentage of the portfolio should be invested in stocks, and what percent in bonds?” The scope of being “original” was limited to investing in small-cap stocks, real estate investment trusts, or purchasing debt issued by a governmental entity outside of the United States.

David Swensen, who has earned 12% returns since managing a portion of Yale’s endowment in the early 1980s, gained attention for investing in alternative investments that led to outperformance of average American endowments by almost six percent annually.

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