📰 Book Recommendation
If you are curious about university endowments investing in Venture Capital, there is a very famous book by David Swenson about “The Yale Model.”
David Swensen, a money manager who gave up a lucrative Wall Street career to oversee Yale University’s endowment and proceeded to revolutionize endowment investing, in the process making Yale’s the best-performing fund in the country over a 20-year period, died on Wednesday in New Haven, Conn. He was 67.
Swensen’s idea, oversimplified, is that if the market is relatively efficient, an endowment should specialize in investments that it has a comparative advantage in. Specifically, because as endowment can hold valuable assets for a very long time, it should invest in private equity, venture capital, and even things like natural resources.
This approach was so very successful for so long that money poured in and there was a great bull market in private equity and some of these other illiquid assets (limited partnerships aren’t terribly liquidity). The approach has been less successful recently.