David Swensen

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David Swensen has been the Chief Investment Officer at Yale University since 1985. He is responsible for managing and investing the University's endowment assets and investment funds, which total about $18 billion. Realizing an annual return of more than 17.2 percent on his investments over the last ten years, Swensen has added more than $12 billion to Yale's coffers, and his consistent track record has attracted the notice of Wall Street portfolio managers.

He is chiefly notable for having invented what has become known as "The Yale Model", a mechanism for Multi-Asset Class Investing.

After receiving his B.A. and B.S. in 1975 from the University of Wisconsin-River Falls, Swensen pursued a Ph.D. in economics at Yale, where he wrote his dissertation, A Model for the Valuation of Corporate Bonds.

Prior to joining Yale in 1985, Professor Swensen spent six years on Wall Street as senior vice president at Lehman Brothers, specializing in the firm's swap activities, and as an associate in corporate finance for Salomon Brothers, where his work focused on developing new financial technologies.

Swensen is a trustee of the Carnegie Institution of Washington and treasurer of the "Hopkins Committee of Trustees". He serves as a trustee of TIAA (Teachers Insurance and Annuity Association of America), and a non-executive director of Schroders PLC. He has advised the Carnegie Corporation, the New York Stock Exchange, the Howard Hughes Medical Institute, the Courtauld Institute of Art, the Yale-New Haven Hospital, The Investment Fund for Foundations (TIFF), the Edna McConnell Clark Foundation, and the States of Connecticut and Massachusetts.

At Yale, where he teaches endowment management at Yale College and at the Yale School of Management, he is a fellow of Berkeley College, an incorporator of the Elizabethan Club, and a fellow of the International Center for Finance.

[edit] The Yale Model

The Yale Model was developed by David Swensen, and is described in his book "Pioneering Portfolio Management", it consists broadly of dividing a portfolio into five or six roughly equal parts and investing each in a different asset class, each as far uncorrelated to the others as possible. The Yale Model is an example of Multi-Asset Class Investing.

Particularly revolutionary at the time, but now becoming increasingly mainstream, was his recognition that liquidity is a bad thing to be avoided rather than a good thing to be sought out, since it comes at a heavy price in the shape of lower returns. The Yale Model is thus characterized by relatively heavy exposure to asset classes such as private equity compared to more traditional portfolios.

His ideas have taken some time to spread beyond the USA, but are slowly being adopted in Europe where a particular advocate has been Guy Fraser-Sampson, whose book "Multi-Asset Class Investment Strategy" builds on Swensen's theories and shows how they can and should be adopted by European pension funds.

The impact of Swensen's influential work in endowment management extends beyond the walls of Yale, most notably to one of its main Ivy League rivals, Princeton. Andrew K. Golden, who currently serves as President of the Princeton University Investment Company, worked with Swensen as an intern and then portfolio manager for the Yale endowment before joining Princeton in 1995.

[edit] Bibliography

[edit] External links

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