Yale’s Money

MoneyParty

Americans know that some colleges have a lot more money than others. But all of this money requires management, complicated management. According to an article by Gillian Wee in Businessweek, Yale, which has a total endowment of $19.4 billion, has been making some interesting new investment decisions. Wee:

Yale University, whose endowment strategy has been a model for U.S. schools, bought new shares of a China exchange-traded fund last quarter.

The stake, valued at $23.2 million as of Dec. 31, was Yale’s biggest new purchase during the three months, according to a filing today with the U.S. Securities and Exchange Commission. Its second-biggest new purchase was a $382,255 holding in Zipcar Inc., the U.S. car-sharing service based in Cambridge, Massachusetts, that completed an initial public offering last year.

Yale’s endowment resulted in a 22 percent return last year.

David Swensen, who has been the chief investment officer at Yale since 1985, initiated a new, aggressive investment strategy (called the Endowment Model) based on broad diversification and avoiding asset categories with low returns.

Back in May, 2010, a paper by the Tellus Institute criticized the Endowment Model for exposing university budgets to unnecessary risk. The Endowment Makes a lot money over the long term, but it also exposes academic institutions to dangerous market fluctuations, causing them to lay off staff and severally hurt local economies.

Businesssweek also reports that Yale has sold its stake in TiVo, the digital recording company, for about $800,000. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer