Harvard and Yale Endowment Investment Success

Posted on January 10, 2008
Filed Under Investing |

The Ivy League schools never cease to impress me

Most people seem to have a love/hate feeling for Ivy League schools. The lovers awe at their advanced academics, great opportunities, and prestige. Haters claim they are “just a school,” and their education is overpriced. Personally, I’m a lover. I love the prestige of the schools, and regardless of what you learn while you’re there, you have a good chance to graduate with a six figure job.

Back to the first statement made above, what recently impressed me with the Ivies is their success investing their endowments. The truth lies in the numbers: In the last ten years, Harvard’s endowment earned 15% per annum. Yale’s endowment earned 17.2% per annum. That is remarkable for any endowment, let alone the endowment of an academic institution. I first came across these remarkable figures from a personal finance blog covering an article by Smart Money.

How do they do it?

Instead of investing in traditional “safe” securities and assets, Harvard and Yale have invested a bit more creatively. Their secret lies in how they allocate their money: a mixture between domestic stocks, foreign stocks, Real estate/commodities, private equity, and hedge funds.

Harvard and Yale Investment portfolio

This somewhat innovative investment technique lead mutual fund managers to copy the Harvard/Yale approach to investing with newly available funds. Just the whole idea of an Ivy league investment strategy being copied by publicly sold mutual funds speaks for the innovation of Ivy Leagues. The Ivy Leagues are ‘with it,’ and this is just another reason why I adore these elite institutions.