Researcher to Critics of “Yale Model”: Not so fast!
| Sep 29th, 2010 | Filed under: Academic Research, Institutional Investing, Today's Post | By: Alpha Male |
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Throughout the past decade, a consensus seemed to emerge that the investment strategy pursued by America’s elite university endowments produced superior risk adjusted returns. The co-called “Yale Model” was said to exploit endowments’ long-term investment horizon and was popularized by Yale’s endowment chief and best-selling author David Swensen. Swensen argued that endowments with the requisite expertise should allocate to alternative investments.
But enthusiasm for the Yale Model began to wane in 2008 as returns from alternative investments began to suffer. By the end of 2009, many were downright critical of it. Although alternative investments lost less money than equities that year, they took the brunt of public anger over the evaporation of billions of dollars of endowment assets. Regular readers will remember this biting critique by the Boston-based Tellus Institute.
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