David Swensen has been the investment manager of Yale's Endowment since 1985 and is known as one of the best investors of our time. He recently was a guest lecturer at one of Yale's economics classes and the lecture is posted online.

Our investment process is largely based on the "Yale Model" of investing and I believe you will find his thoughts reassuring and educational.

Click here to watch Swensen's lecture at Yale.

Tags: Greg, Universities, Asset Class

The endowments of Harvard, MIT, and Yale all utilize Index ETFs as a part of their investment strategies. Reviewing their top ETF holdings provides insight into their investment strategy.

It seems that heading into this crisis, they had significant allocations to Emerging Market Equity Indexes. It will be interesting to review their public filings at year end. I would not be surprised to see them adding to their US Equity positions as the US markets declined in September and October.

Harvard Endowment


MIT Endowment


Yale Endowment

Tags: Greg, ETF, Universities

Volatility is not much fun if you are looking for stability and consistent long term returns. Universities typically use volatility to rebalance their portfolios. In fact this rebalancing can reduce volatility and improve performance.

David Swensen wrote in one of his books, Unconventional Success, that Yale has been able to improve performance by over 1% due to their rebalancing Sotechniques.

Tags: Rebalance, Universities

Well, everything (except real estate) has been getting a lot more expensive and it looks like it’s not going to get any better. Consumer prices increased by 1.1% month over month in June. This was a lot higher than the consensus forecast and it’s the biggest monthly rise since Hurricane Katrina. The annual inflation rate jumped to a 17 year high of 5%.



So what does this mean for you and your portfolio? For discussion purposes let me highlight some of the techniques used by universities to hedge against inflation.

Often in managing their endowments, universities construct portfolios that include several hedges against inflation. To begin with, Treasury Inflation Protected Securities (TIPS) is an allocation that universities often use. These are bonds that typically go up when the consumer prices go up. David Swensen, the former head of the Yale Endowment, believes TIPS are an important component to a portfolio. Universities often allocate to commodities, precious metals and natural resources as well. On a sad note, usually real estate is a good inflation hedge, but unfortunately the deleveraging of the credit markets will likely prevent an appreciation in real estate in the near term. Important Disclosure

Tags: Greg, Asset Class, Universities