Yale Case Study

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BUFN 755 Yale University Investments Case Study Executive Summary - Yale’s endowment is currently targeting its investment portfolio at a target investment is 33% in private equity, 28% in real assets, 19% in absolute return, 9% in foreign equity, 7% in domestic equity, and 4% in bonds. - In the changing global economy, Yale is looking to modify its investment strategy to effectively take advantage of new opportunities as they present themselves. - Yale takes proper precautions to mitigate risks and to find the best available investments by developing and managing its relationships with its investment managers to emphasize long-term mutual-benefit relationships with aligned incentives and interests. - Private Equity Investments offer the greatest amount of return at a reasonable risk, especially given Yale’s close relationships with its asset managers. - Yale should continue its current investment strategy, but should look to increase its private equity investment weight moving forward, especially in new international markets as they present themselves. 1. Introduction In 2011, David Swensen, chief investment officer at Yale University, is faced with a recurring challenge: how to properly balance the different assets in Yale’s endowment investment portfolio. At the date of the case, its target investment is 33% in private equity, 28% in real assets, 19% in absolute return, 9% in foreign equity, 7% in domestic equity, and 4% in bonds. With the changing market conditions developing as a result of the global economic crisis which was still unfolding in addition to the normal changes that the market exhibits over time, Swensen was carefully evaluating Yale’s strategy to ensure that he would not miss any new opportunities as they made themselves available. In particular, Swensen was looking at his strategy relating to private equity – it had the highest

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