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Yale Alternative Investments

Yale Alternative Investments

Yale Endowment Fund Cutting Hedge Fund Investments

Yale University is making a surprising move in its alternative asset allocations.  The $16.3 billion endowment fund is increasing its private equity allocations while reducing its investments in hedge funds.  While many investors are trying to place their money with hedge funds after last year's big gains, this endowment fund is investing in private equity after a dismal year for the industry.
The private research university, which has a $16.3 billion endowment fund, is decreasing its hedge fund allocation by 6% to 15%. Meanwhile, its private equity target has been raised to 26% from 21%.

The university released its portfolio rebalancing in an online report Thursday. A representative for the school declined additional comment.

The report anticipated private equity would outperform, noting alternative investing exploited market inefficiency. Private equity has earned more than 30% since the school started investing in the asset class in 1970.

Yale University investment head David Swensen has been a longtime advocate for alternative investing; championing it as superior to traditional asset management. The Ivy League school has the second richest endowment fund after Harvard University, which has $25 billion in capital.  Source

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