David F. Swensen
"He's right up there with John Bogle, Peter Lynch, [Benjamin] Graham, and [David] Dodd as a major force in investment management," says Byron Wien, a longtime Wall Street strategist.
[6] David Frederick Swensen was born in Ames, Iowa, on January 26, 1954, and was raised in River Falls, Wisconsin.
According to Charles Ellis, founder of Greenwich Associates and former chair of Yale's investment committee, "When it snowed, David went to Jim's house to shovel the sidewalk".
"[2] Swensen began his investment career in the early 1980s, and has since advised the Carnegie Corporation, the New York Stock Exchange, the Howard Hughes Medical Institute, the Courtauld Institute of Art, the Yale-New Haven Hospital, The Investment Fund for Foundations (TIFF), the Edna McConnell Clark Foundation, and the States of Connecticut and Massachusetts.
This career move was suggested by a Salomon Brothers investment banker and Yale alumni, Gene Dattel, who was deeply impressed by Swensen.
[9] Prior to joining Yale in 1985, Swensen spent three years on Wall Street as senior vice president at Lehman Brothers,[10] specializing in the firm's swap activities, where his work focused on developing new financial products.
Swensen engineered the first currency swap transaction according to When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein.
[2] A year later, in 1986, he was joined by Yale College and School of Management graduate Dean Takahashi, who soon became Swensen's trusted deputy.
Swensen called the editor-in-chief a "coward" for deleting an inaccurate sentence and removing a footnote in an op-ed that he submitted to the paper; his column, which he required to be published unedited, responded to a student teach-in that criticized companies allegedly in the Yale portfolio.
[14] On August 13, 2011, David Swensen published an op-ed in The New York Times entitled "The Mutual Fund Merry-Go-Round,"[15] about how the pursuit of profits by the management companies creates a conflict of interest with fiduciary responsibilities to their investors.
Central in the Yale Model is broad diversification and an equity orientation, avoiding asset classes with low expected returns such as fixed income and commodities.
[16] The Yale Model is thus characterized by relatively heavy exposure to asset classes such as private equity compared to more traditional portfolios.
They also implemented strategies that would take advantage of endowment idiosyncrasies: presumption of perpetuity, tax-exempt status, as well as distinguished and devoted alumni in the financial world.
As of 2019 about 60% of Yale endowment portfolio is allocated to alternative investments such as hedge funds, venture capital and private equity.
Whatever long-term gains it may have produced for colleges and universities in the past must now be weighed more fully against its costs – to campuses, to communities and to the wider financial system that has come under such severe stress.
The general strategy that he presents can be boiled down to the following three main points of advice:[21] He slams many mutual fund companies for charging excessive fees and not living up to their fiduciary responsibility.
[7][24] In February 2009, Swensen was named to a two-year term on President Barack Obama's Economic Recovery Advisory Board, on which he served from 2009 to 2011.
In 2008, he was awarded the American Academy of Arts & Sciences Fellowship and the year prior, the Mory's Cup for "conspicuous service to Yale."
[22] In 2008, he was inducted into Institutional Investors Alpha's Hedge Fund Manager Hall of Fame along with Alfred Jones, Bruce Kovner, George Soros, Jack Nash, James Simons, Julian Roberston, Kenneth Griffin, Leon Levy, Louis Bacon, Michael Steinhardt, Paul Tudor Jones, Seth Klarman and Steven A.
