David Swensen, the head of Yale University’s endowment who helped reshape how institutions manage their money, has died from cancer aged 67.
After stints at Salomon Brothers and Lehman Brothers, Swensen returned to his alma mater in 1985 to lead its investment office. At the time, endowments were typically conservatively managed, but Swensen overhauled the model dramatically, taking advantage of their long-term focus to invest heavily in the nascent private equity and hedge fund industries.
His approach was so successful it revolutionised how endowments and many other institutional investors allocate their money, and the “Yale model” spread and helped change the wider investment industry.
“With his guidance, Yale’s endowment yielded returns that established him as a legend among institutional investors,” Peter Salovey, Yale’s president, said in a statement. “A natural teacher, he prepared a generation of institutional investors who have gone on to lead investment offices at other colleges and universities, further extending the scope of David’s influence.”
The Yale Investments Office managed $31.2bn as of June 2020, and says it has averaged annual returns of 12. 4 per cent a year over the past three decades. In the 2021 fiscal year its contributions accounted for over a third of the university’s overall revenues.
Almost a quarter of the endowment is invested in venture capital, and combined with private equity, hedge funds and real estate, so-called “alternative” investments account for nearly three quarters of its assets.