- December 1, 2016; Vol. 3, Number 12

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A Yale Education: Why advisers and investors should take some lessons from the endowment model

by Frank Muller

As someone who is known for evangelizing the benefits of including illiquid investments in client portfolios, one question I am often asked by investment advisers is, Should I simply follow the Yale endowment model of asset allocation?

Let’s first explore why Yale’s endowment is seen as a model for asset allocation: long-term performance. During the decade ending June 30, 2016, Yale’s investment program added $7.1 billion of value relative to the results of the mean endowment. The university’s 20-year return of 12.6 percent per annum (with notably lower volatility) produced $22.1 billion in relative value. Over the past 30 years, Yale’s investments have returned 12.9 percent per annum, adding $26.6 billion in value relative to the Cambridge mean.

Based on performance alone, should we invest our assets exactly like Yale? The short answer is no. Yale is an institution with a seemingly infinite half-life; one that can weather market fluctuation

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