Reference no: EM133788768

Assignment: Asset Management

Read the HBS case, Yale Investments Office: November 2020.

Also read selected parts of the attached 2017 Yale Endowment Report, ONLY: Investment Policy Section 3 on pages 7-8, Asset Class Characteristics on pages 12- 15; Spending Policy Section 4 on pages 18-19; MOST IMPORTANTLY Active Management of Endowment Assets on pages 20-21; Investment Performance Section 5 on pages 22-23; Manager Sourcing on pages 24-25

Also take a look at and skim the Yale University Investments Office: February 2015 case, with particular attention to the attachments that are different from those for the 2020 case. (You will notice that the Yale Investments Office: November 2020 and Yale University Investments Office: February 2015 cases are highly duplicative -- you may skip the redundant parts.)

I suggest reading the 2020 case first, then the 2017 Endowment Report, then take a look at the 2015 case.

Respond to the following questions using ONLY facts and analysis from these; stated otherwise, to answer correctly, you will NOT require any additional information and you will not need to conduct any research over the internet.

Answer the following questions:

I. If you were advising David Swenson in 2015 when the first HBS case was written:

i. Would you urge him to continue with his high allocation to private equity?
ii. In private equity, would you have targeted more to buyouts or venture?
iii. Would you have targeted more to international or domestic private equity and venture capital? Why or why not?

(Pretend you are answering these questions in 2015. Do NOT reference subsequent performance from the 2017 Yale Endowment Report or 2020 for your answers. Your responses to these questions should be based solely upon facts and analysis available in 2015, that is, information in the HBS Case, Yale Investment Office: February 2015.)

II. Now, compare this to the 2017 Yale Endowment Report.

i. What did Yale subsequently do? Compare and contrast the Yale allocations from 2015 to 2017. What changed?

ii. Were those changes beneficial from a performance standpoint? Specifically, did Yale have high allocations to those asset classes that outperformed over these years?

iii. Why does Yale favor active investing?

III. The HBS Yale 2020 Case includes Exhibit 1, which shows Yale's asset allocations from 1985 through 2020. During this 35-year period, Yale substantially changed its asset allocations. Provide:

i. Two reasons why Yale might have reduced Domestic Equity as much as it did; and,
ii. Two reasons why it might have increased and decreased its allocation to Absolute Return over the years.

IV. Using the 2020 and 2015 cases and the 2017 Endowment Report, please comment on the following: Relative to other colleges and universities:

i. What asset classes does Yale overweight and underweight? Why? Has this been beneficial?
ii. Other than asset allocation, what does Yale cite as the reason for its outperformance?