If Warren Buffett could not have built Berkshire without Charlie Munger, the same could be said of David Swensen and Dean Takahashi.
Many consider Swensen and Yale to be the greatest CIO and institutional fund in history. Its success has changed the face of nonprofit investing, particularly in the United States. Investors who trained under Swensen and Takahashi now lead the funds of Princeton University, MIT, Stanford University, University of Pennsylvania, Bowdoin College, and the Packard Foundation, among others.
Takahashi’s departure creates a vacuum at the endowment office, and it is unclear who — if anyone — is poised to fill it.
As mentioned before, Takahashi joined Swensen at the endowment more than thirty years ago.
Take Dean Takahashi ’80 B.A., ’83, for example. He took a job with the Yale University Investments Office in 1986, two and a half years out of SOM and just shy of a year after Yale’s now-legendary chief investment officer, David Swensen ’80 PhD, arrived there. “When I started,” Takahashi says, “Yale had a billion and a half dollars, and we’ve now generated more than $40 billion of gains since then.” Over those 32 years, Swensen, Takahashi, and their colleagues have generated returns of 12.8% per annum—a record unequalled among institutional investors.
The so-called ‘Yale Model’ did not exist back then.
At the time, the university had more than 60% of its funds invested in U.S. stocks, Takahashi said. The new investing strategy that he helped launch emphasized diversification and increased the endowment’s commitments to venture capital, foreign equity, private equity, real estate and natural resources. In addition to reducing its exposure to domestic marketable equity, the university decreased its allocations to bonds and cash. “Yale needs to be equity-oriented in order to generate high returns,” Takahashi said.
The results have been dramatic. During the past 20 years, the endowment has had the best performance of any endowment or institutional investor with an average annual return of 13.9%.
Post by Marcelino Pantoja