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For the two decades after Swensen took over as manager of Yale’s endowment in 1985 (just five years after he’d gotten his economics Ph.D at Yale), this worked spectacularly well — with a 16.1% annualized return compared with 12.3% for the S&P 500 and a remarkable record of sailing through stock market downturns that pummeled most other institutional investors.
https://hbr.org/2010/04/why-the-yale-model-of-investin/
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The prevalence of Swensen acolytes in leadership posts highlights how dominant the Yale investment model has become among major U.S. universities. Colleges and universities ended 2014 with 51% of their portfolios invested in less-traditional fare like hedge funds, private equity and real estate that Yale favors—nearly double the allocation to those investments in 2001, according to annual surveys done by Nacubo and Commonfund.
http://www.wsj.com/articles/universities-look-to-yale-for-in...
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Swensen’s idea, implemented at Yale and copied nationwide, was that universities should shift their endowment money out of traditional investments such as stocks and bonds and into higher-yielding ones like private equity, hedge funds, and real estate. The Yale model, as it came to be known, perennially outperformed stodgier strategies, gaining Swensen gurulike adulation.
http://upstart.bizjournals.com/executives/2009/03/18/David-S...
B&A is a boring-sounding organization which is the primary income sheet profit-center, which rakes in slightly more than tuition; SMC is balance sheet (aka investment) management.
Stanford is unlike most other universities in the fact that there is no pretense of firewalling business opportunity development from academic research. I think this pushes away some pure-research, money-is-evil people and attracts more entrepreneurial folks.
/u/nrao123 is correct. Yale Endowment is the pioneer and the gold-standard that every other endowment is trying to mimic and compares themselves to.
That's a bit of an exaggeration, no? I think the vast majority of people would correctly describe it as a top-ranked private university in California.
This was new. Before that, universities tended to put their endowments into passive investments - real estate, stocks, and bonds. Investing in startups worked out very well for Stanford. Stanford had pre-IPO stock in Cisco, Yahoo, Google... They have money in various VC funds. Buying into YCombinator is consistent with that investing approach.
As SMC became more powerful, executives from SMC started moving into positions in the university itself. SMC moved its HQ onto the main campus. Not clear where this will end; we'll have to see who replaces Henessey as president.
[1] http://www.smc.stanford.edu/