May 17, 2021 12:00 AM

Graphic: David Swensen’s monumental legacy

David F. Swensen, Yale University's chief investment officer from 1985 until his death this month, developed the "Yale model" of investing, which included embracing less-liquid asset classes such as leveraged buyouts and venture capital. Over the 10 years ended June 30, Yale's endowment nearly doubled to $31.2 billion and produced a 10.9% annual return net of fees, besting its benchmarks and placing it in the top 2% of colleges and universities.

Shifting allocations: Within private equity, venture capital allocations rose to 22.6% from 10.3% over the past 10 years, while leveraged buyouts fell to 15.8% from 24.8%. Domestic equities made up just 2.3% of the endowment's asset mix in 2020 vs. 1997's 21.5%.

Change in asset allocation

Benchmark busters: Among the more impressive asset-class performances over the 20 years through June 2020 were buyout and VC strategies, at 11.2% and 11.6%, respectively; international equities, which returned 14.8% annually; and natural resources, with a 13.6% return.

20-year average annual return

Cash cow: The endowment's strong returns allowed it to fund a greater portion of Yale University's operating budget. The $189 million spent in 1997 covered about 17% of the school's operating budget revenue, while in 2020 the endowment's $1.4 billion contribution accounted for greater than one-third of revenue.

Contribution to Yale's budget

Family tree: After working under Mr. Swensen, endowment employees have gone on to take prominent investment positions at major non-profit and investment organizations. Thus, his investment legacy continues, benefiting a new generation.

Notable alumni

Seth D. Alexander
President, MIT Investment Mgmt. Co.

Peter Ammon
CIO, University of Pennsylvania

Donna Dean
Former CIO, The Rockefeller Foundation

Andrew K. Golden
President, Princeton University Investment Co.

Randy Kim
CIO, Rainwater Charitable Foundation

Anne Martin
CIO, Wesleyan University

Mary McLean
Former CIO, Ewing Marion Kauffman Foundation

Lauren Meserve
CIO, The Metropolitan Museum of Art

Kimberly Sargent
CIO, David & Lucile Packard Foundation

D. Ellen Shuman
Co-founder, Edgehill Endowment Partners

Paula Volent
CIO, Bowdoin College