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David Swensen, the head of the Yale University staff who helped reform the way institutions manage their money, has died of cancer at age 67.
After passing through Salomon Brothers and Lehman Brothers, Swensen returned to his alma mater in 1985 to head his investment office. At the time, the endowments were normally managed conservatively, but Swensen revised the model dramatically, taking advantage of its long-term focus to invest heavily in the nascent private equity and hedge fund industries.
His approach was so successful that it revolutionized the way endowments and many other institutional investors spend their money, and the “Yale model” spread and helped change the broader investment industry.
“With its guidance, Yale’s endowment produced returns that established it as a legend among institutional investors,” Peter Salovey, president of Yale, said in a statement. “A natural teacher, he prepared a generation of institutional investors who have gone on to run investment offices in other colleges and universities, further expanding the scope of David’s influence.”
Yale’s investment office managed $ 31.2 billion in June 2020 and claims to have averaged 12.4% annual returns over the past three decades. In fiscal year 2021, their contributions accounted for more than a third of the university’s overall revenue.
Almost a quarter of the endowment is invested in venture capital and, combined with private equity, hedge funds and real estate, so-called “alternative” investments account for about three-quarters of its assets.
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