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Yale Endowment Blasts Low-Fee Critics, Says Gains Would Lag

  • Fund says it identifies top managers for superior returns
  • Buffett and Gladwell have criticized money managers’ rich fees
Vanderbilt Hall stands on the Yale University campus in New Haven, Connecticut, U.S., on Friday, June 12, 2015. Yale University is an educational institute that offers undergraduate degree programs in art, law, engineering, medicine, and nursing as well as graduate level programs.

Vanderbilt Hall stands on the Yale University campus in New Haven, Connecticut, U.S., on Friday, June 12, 2015. Yale University is an educational institute that offers undergraduate degree programs in art, law, engineering, medicine, and nursing as well as graduate level programs.

Photographer: Bloomberg
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Yale University, one of the most-watched and best-performing college endowments, defended the fees it pays to external managers, saying in an annual investment report that a low-cost passive strategy would have “shortchanged’’ the Ivy League school’s students and faculty.

While declining to provide details about how much the fund pays, its managers earn “large performance-based fees,’’ the report said. The $25.4 billion endowment, the second largest in higher education behind Harvard, has been run since 1985 by David Swensen and returned 3.4 percent for the most recent fiscal year when college endowments lost 2 percent on average.