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Barry Ritholtz

Harvard Should Copy Calpers, Not Yale

Harvard's endowment fund can learn something from Calpers decision to exit investments in hedge funds.
Watch California, not New Haven.
Watch California, not New Haven.

For a long time, the fund managers at Yale's endowment were the industry's gold standard. Inevitably, as in so many things Ivy, this was noticed by rival Harvard. The so-called Yale Model, developed by David Swensen and his colleague Dean Takahashi, was rich with alternative investments, private equity, commodities and real estate and other items that weren't plain vanilla stock and bond investments.

The success of the Yale Model led to lots of copycats. The problem was that other schools could duplicate the look, but not quite the feel of Yale's endowment investments, but without Swensen's unique talents. He even wrote a book explaining how to be like Yale's endowment titled, "Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment."