Yale University Investment Fund

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Finance 452: Investment Management Case: Yale University Investments Office Megan Hurley, Robert Liu, Aaron Nachman, David Naert, Erik Westerlund Case Intro: In August 2006 with David Swensen as head of the Yale Investments Office, the Yale endowment has grown to 18 billion dollars. This was achieved with the help of focusing on less efficient markets such as private equity, real assets, and absolute return investments. However, with such a large endowment, the office is continually faced with challenges, which will be discussed in this case. Yale was established in 1701 and by 1930, their endowment was represented by 42% in equities. The…show more content…
3. How has the Investment Office made international private equity investments? What explains the differences between the performance of its international and domestic private equity investments? The Investment Office made international private equity investments with much precision and caution. Foreign equities were a good source of diversification, since potential returns had less correlation with the U.S. equity market and there were fewer funds competing for deals. Yale’s initial strategy of foreign equity investments was mostly concentrated in France and England, but recently switched their focus towards more emerging markets in Asia, Latin America, and Eastern Europe, in an attempt to find potential undervalued securities due to the less efficient markets in these areas. Also, these emerging markets were growing much more quickly than markets of developed countries. Yale believed that despite the threats associated with newer, riskier markets, the rapid rate of growth allowed for loftier returns. Yale employed seven active emerging markets managers and were broken down as follows: one investing in large US-based equities, one investing in small London-based emerging markets, one investing in African emerging markets, one investing in Chinese emerging markets, one investing in Eastern Europe emerging markets, and two investing in Asian emerging
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