David Swensen, who pioneered an investing style that helped endowments beat markets by using alternative assets such as private equity and real estate, said investors who don’t have access to top managers are best off using index products.
Yale University, home to the top- performing endowment, paid Chief Investment Officer David Swensen $3.7 million in 2008, less than the five top-earning money managers at Harvard University.
David Swensen, the long-serving head of Yale University’s endowment who helped rewrite how colleges invest their money, has been diagnosed with cancer.
Jane Mendillo, who helped Harvard University recover from the worst recession since World War II, is resigning at the end of this year as head of the world’s largest school endowment.
After years of subpar results at Harvard Management Co., three high-level managers have exited the $32.7 billion endowment and the university is searching for new leadership.
The University of Pennsylvania has hired Peter Ammon to oversee investments in its endowment and pension plan, which have a combined $7.8 billion of assets.
Yale University, the world’s second- wealthiest school with a $20.8 billion endowment, said it can still beat market returns, known as generating alpha, as it seeks to stand out from other investors.
Investing in illiquid assets to boost returns is inappropriate for institutions that need reliable cash flows. Paying high fees for money managers is even worse.
"There are two sensible approaches to investing-- either 100 percent active or 100 percent passive."
- David Swensen on Jan 31, 2012