Yale University outlines how its endowment model drives long-term investment success through diversification, illiquidity, and disciplined spending policies. The paper highlights a 12.3% return in 2018 and argues that heavy allocations to alternatives, often over 70%, challenge traditional portfolio construction assumptions.
The Yale Endowment 2018
Yale
Research
32 Pages
Key Takeaways
Alternative Assets Dominate: Over 70% of the portfolio is allocated to private equity, hedge funds, and real assets, far exceeding traditional 60/40 models and driving long-term excess returns.
Strong Long Term Returns: The endowment delivered a 12.3% return in 2018 and 7.4% annualized over 10 years, outperforming benchmarks and ranking top in 6 of 10 years.
Spending Policy Stability: Annual distributions reached about $1.3 billion, representing roughly 5.25% of assets and about 34% of Yale’s total revenue, balancing current funding with intergenerational equity.
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