Yale's David Swensen Obituary

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MMiroir
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Yale's David Swensen Obituary

Post by MMiroir »

David Swensen, Yales long time endowment manager, passed away recently. Snippets from the obituary:

https://news.yale.edu/2021/05/06/self-c ... s_5-7-2021
‘Self-confident yet selfless’: Yale’s David Swensen dies at 67

Raised in Wisconsin and a graduate of the University of Wisconsin-River Falls, Swensen first came to Yale in 1975 as a graduate student in economics. He worked especially closely with the late Nobel Prize-winner James Tobin and with William Brainard ’62 Ph.D., now the Arthur Okun Professor Emeritus of Economics. Together they advised Swensen on his doctoral dissertation, which examined the valuation of corporate bonds and yielded valuable data for Tobin’s work on company valuations.

After earning his degree, Swensen worked for Salomon Brothers and Lehman Brothers, where he pioneered the development of interest rate swaps. Brainard meanwhile became Yale’s provost, and in 1985 he hired Swensen to manage the Yale endowment.

Over Swensen’s 35-year stewardship, the Yale Endowment generated returns of 13.1% per annum through June 30, 2020, outperforming the Cambridge Associates mean by 3.4% and a traditional 60% stock/40% fixed income portfolio by 4.3% per annum. In dollar terms, Yale’s performance during Swensen’s tenure translates into gains of $45.6 billion, with $36.0 billion in value added relative to the Cambridge Associates mean. The endowment is now more than $31 billion in assets, and spending from it covers about one-third of the university’s budget.
A couple of things stood out to me. One is that he graduated from a relatively little-know regional college and was able to have tremendous success high finance. The second is that he was able to generate such strong returns over a very long period of time at a place that normally requires relatively conservative investing.

For most of my investing life, I have been a boogleheader by stuffing money into low cost mutual fund and letting it sit forever, but am intrigued about how Mr. Swensen was able to generate these types of returns. Since I hopefully have another 35 years of investing to look forward to, any ideas or suggestions?
apex84
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Re: Yale's David Swensen Obituary

Post by apex84 »

He wrote a book for individual investors.

Unconventional Success: A Fundamental Approach to Personal Investment
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Wiggums
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Re: Yale's David Swensen Obituary

Post by Wiggums »

MMiroir wrote: Fri May 07, 2021 2:21 pm David Swensen, Yales long time endowment manager, passed away recently. Snippets from the obituary:

https://news.yale.edu/2021/05/06/self-c ... s_5-7-2021
‘Self-confident yet selfless’: Yale’s David Swensen dies at 67

Raised in Wisconsin and a graduate of the University of Wisconsin-River Falls, Swensen first came to Yale in 1975 as a graduate student in economics. He worked especially closely with the late Nobel Prize-winner James Tobin and with William Brainard ’62 Ph.D., now the Arthur Okun Professor Emeritus of Economics. Together they advised Swensen on his doctoral dissertation, which examined the valuation of corporate bonds and yielded valuable data for Tobin’s work on company valuations.

After earning his degree, Swensen worked for Salomon Brothers and Lehman Brothers, where he pioneered the development of interest rate swaps. Brainard meanwhile became Yale’s provost, and in 1985 he hired Swensen to manage the Yale endowment.

Over Swensen’s 35-year stewardship, the Yale Endowment generated returns of 13.1% per annum through June 30, 2020, outperforming the Cambridge Associates mean by 3.4% and a traditional 60% stock/40% fixed income portfolio by 4.3% per annum. In dollar terms, Yale’s performance during Swensen’s tenure translates into gains of $45.6 billion, with $36.0 billion in value added relative to the Cambridge Associates mean. The endowment is now more than $31 billion in assets, and spending from it covers about one-third of the university’s budget.
A couple of things stood out to me. One is that he graduated from a relatively little-know regional college and was able to have tremendous success high finance. The second is that he was able to generate such strong returns over a very long period of time at a place that normally requires relatively conservative investing.

For most of my investing life, I have been a boogleheader by stuffing money into low cost mutual fund and letting it sit forever, but am intrigued about how Mr. Swensen was able to generate these types of returns. Since I hopefully have another 35 years of investing to look forward to, any ideas or suggestions?
His book, Unconventional Success, makes three recommendation: diversify into six asset classes, rebalance your portfolio to the original percentages of each asset class at least once or twice a year, and utilize low-cost index funds and ETFs.
"I started with nothing and I still have most of it left."
Misenplace
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Re: Yale's David Swensen Obituary

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This topic is now in the Investing - Theory, News & General forum.
Flashes1
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Re: Yale's David Swensen Obituary

Post by Flashes1 »

He outperformed one of his benchmarks by approx. 3.1%/annum for 35 years? That's such a big margin over the length of time - hiring him to run their endowment had to have been one of the greatest hires in the history of finance. Shocking that 1/3 of Yale's annual spending comes from the endowment.
GP813
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Re: Yale's David Swensen Obituary

Post by GP813 »

He had great performance as a money manager but Yale's endowment is a travesty, a complete disgrace of inequity.
Doc7
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Re: Yale's David Swensen Obituary

Post by Doc7 »

GP813 wrote: Fri May 07, 2021 7:08 pm He had great performance as a money manager but Yale's endowment is a travesty, a complete disgrace of inequity.

What does this mean?
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nedsaid
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Re: Yale's David Swensen Obituary

Post by nedsaid »

I am very sad to hear this. David Swensen was one of those people whose opinions that I listened to. A bright and insightful person. He is sort of the Peter Lynch of Endowments.
A fool and his money are good for business.
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