Yale’s Chief Investment Officer David Swensen has significantly readjusted Yale endowment investment targets, according to the recently released 2002 Yale endowment report.
The document, available online, reports that Yale has readjusted the percentage of endowment investments in private equity stakes, resulting in the first change in investment targets in three years. The target for private equity stakes is now fixed at 17.5 percent, down from 25 percent.
As a result, the percentage of the endowment held in real assets — including real estate, oil, gas and timber — has increased from 17.5 percent to 20 percent. Twenty-five percent of the endowment will now be held in hedge funds, up from 22.5 percent, and an additional 12.5 percent will be held in foreign equity, up from 10 percent.
Over the past two years, Yale’s private equity assets have decreased from 25 percent to 14.4 percent.
“The private equity marketplace appears less attractive than it has in the past,” the report said.
But the target of 17.5 percent remains above the current holding of 14.4 percent. According to the report, private equity market conditions suggest the need to be “selective” in choosing investment partners.
“By setting the new private equity target at 17.5 percent — Yale expresses a desire for deliberate growth in private equity exposure over the next few years,” the report said.
Yale’s current 14.4 percent investment in private equity is still considerably above the educational institution mean of 5.5 percent, according to the report.
In the 2001-2002 fiscal year, the Yale endowment experienced a 0.7 percent return on investments, resulting in a decrease of total endowment value from $10.7 billion to $10.5 billion.
The report is available online at www.yale.edu/about/Endowment_Update.pdf.
— Jessamyn Blau