“Bank of Mum and Dad bailed out by Bank of Nan and Grandad”
- Headline from The Daily Mash.
The Yale Endowment, under the management of its Chief Investment Officer David Swensen (author of two highly recommended books on investing – Pioneering Portfolio Management and Unconventional Success) since 1985, has a deserved reputation for generating superior investment returns. But for the fiscal year ending in June 2009, the Endowment lost a quarter of its value. What went wrong ?
The financial crisis of 2008 needs little introduction. But it hit the Yale Endowment particularly hard. Apparent diversification failed. Its holdings in various forms of listed equities fell in price by double digit percentages. Its ‘absolute return’ funds fell by over 9%. Private equity investments fell by over 24%. Its holdings in real assets fell by over one third. Its energy investments lost 47.4%.
Yale in 2008 was underweight just about the only asset that might have staunched the bleeding..
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