Comments on: What Can We Learn from Yale Endowment’s 28% Annual Return?

By: Retirement Investment Advisor

Retirement Investment Advisor — Fri, 17 Oct 2008 03:52:47 +0000

There is a more up-to-date study of both Harvard and Yale’s investment approaches and their historical returns:

http://investmentscientist.com/2008/09/21/all-weather-portfolio-investing-like-yale-harvard-endowments/

By: The Yale Endowment Fund Asset Allocation » The Dividend Guy Blog

The Yale Endowment Fund Asset Allocation » The Dividend Guy Blog — Tue, 01 Apr 2008 11:57:22 +0000

[...] Endowment Fund. The Yale fund has boasted an annualized return of 17.2% during the last 10 years (source)! With returns like that I think it is wise to see how they did [...]

By: Ric

Ric — Tue, 06 Nov 2007 00:39:43 +0000

Your pie chart is materially wrong. Not only does it not total out to 100, but the real estate portion should be titled “Real Assets.” This is misleading as the majority of that sector position is primarily in commodities not real estate.

By: Super Saver

Super Saver — Sun, 07 Oct 2007 18:15:34 +0000

Sun,

Great post.

Recently, I attended a presentation about endowment investment management. I saw graphs sharing the same information. I concluded that there are, as there always have been, inefficiencies in the market (perhaps not the US stock market which can be exploited by the savvy investor. However, it involves having the right knowledge, good analysis, and doing a lot of hard work, which the average investor can’t do.

For example,I would guess that there are endowment funds buying up “sub-prime debt” for literally pennies on the dollar. Even if it only rises to 25 cents on the dollar, they will have made lots of money. Real estate is also another area for potential great gains, if one is sufficiently capitalized.

This is truly the time of opportunity where one can find underpriced investments A good cautious approach is to not risk too much and turn the investment into a gamble. Perhaps no more than 5-10% of one’s total investments.

By: The Sunday Review #41

The Sunday Review #41 — Sun, 07 Oct 2007 13:31:16 +0000

[...] What Can We Learn from Yale Endowment’s 28% Annual Return? by Sun @ The Sun’s Financial Diary. [...]

By: Sun

Sun — Sat, 06 Oct 2007 03:52:20 +0000

While I agree with you that the biggest difference between the personal investment and the endowment is the investment time frame, the goal should be the same for the two: maximizing the return. The endowment got the extraordinary return by diversifying the investments and taking more risk. That’s the concept we can use, even though we don’t have that long time frame. Investing in a total stock market fund and a total bond fund is the simplest strategy, but we may not get the return that we hope we can get.

By: Finance » Blog Archive » What Can We Learn from Yale Endowment’s 28% Annual Return?

Sat, 06 Oct 2007 03:08:58 +0000

[...] Оригинал �?ообщени�? от Sun тут… [...]

By: MossySF

MossySF — Sat, 06 Oct 2007 00:13:39 +0000

We can look to the TIAA-CREF Real Estate Annuity account for clues. It holds direct ownership in property and does full appraisals annually with estimated appraisals quarterly. I’m guessing because this fund holds so many properties, they have to do batches of appraisals every week. So if property prices go up/down, they can only update the prices for 1/50th or 1/100th of total holdings. This creates the illusion of lower volatility because even if the entire market went down 2.5% that day, only the 1/50th reappraised would impact the daily NAV.

One more major advantage Swenson has that we cannot reproduce — as an endowment, all transactions are tax free. So Swenson can rebalance to his heart’s delight often rebalancing daily. No taxes — enough money clout to reduce transaction expenses.

By: TraderMark

TraderMark — Fri, 05 Oct 2007 18:56:11 +0000

Also how does one “value” real estate. There are people living in homes in CA right now who think its value is $1.2M when the market price is $900K. It could drop to $700K in 12 months. How would Yale mark that? $1.2M?

If I could mark 1/4 of my portfolio to my liking I could do well too… i.e. yes that property bought in Chile, worth $X last year, I am going to say its worth $X x 1.08% this year. There ya go, 8% return! Easy.

By: KMC

KMC — Fri, 05 Oct 2007 13:52:48 +0000

MossySF beat me to it.

I don’t think looking at the asset allocation of endowments like this is at all useful for individual investors for the reason mentioned – time horizon. If Yale’s managers screw up on an investment choice, they have essentially forever to recover. Not so you and me.

By: MossySF

MossySF — Thu, 04 Oct 2007 23:26:10 +0000

There is one major factor in the Yale portfolio that we can’t reproduce — the 100+ year timeframe. Because the average person has a 30 year horizon for retirement, investments must be pretty liquid. An endowment though can invest in illiquid vehicles which may have higher returns — the premium for being able to lock up money for long periods.

By: Investing » What Can We Learn from Yale Endowment’s 28% Annual Return?

Investing » What Can We Learn from Yale Endowment’s 28% Annual Return? — Thu, 04 Oct 2007 19:13:04 +0000

[...] Read the rest of this great post here [...]