What You Need to Know
- Swensen managed one of the most-watched and best-performing college endowments for more than three decades.
- Many of the world’s wealthiest investors sought to replicate his investment model, which favors more illiquid assets such as private equity.
- He advised President Barack Obama as a member of the President’s Economic Recovery Advisory Board.
David Swensen, the chief investment officer at Yale University who helped revolutionize how college endowments are managed, has died. He was 67.
Swensen died May 5 after a long battle with cancer, Yale said Thursday in a statement. He had gone on temporary leave from his job in September 2012 to undergo treatment before returning to his duties at Yale.
Swensen managed one of the most-watched and best-performing college endowments for more than three decades. Many of the world’s wealthiest investors sought to replicate his investment model, which favors more illiquid assets such as private equity.
“David served our university with distinction,” Yale President Peter Salovey said in the statement. “He was an exceptional colleague, a dear friend and a beloved mentor to many in our community. Future generations will benefit from his dedication, brilliance and generosity.”
After arriving from Wall Street in 1985 to manage money for the school in New Haven, Connecticut, Swensen overhauled his alma mater’s endowment, which was largely invested in domestic stocks and bonds. He diversified into private equity, hedge funds and real estate.
While the strategy is now widely accepted, at the time it was novel for a college and produced superior returns against both benchmarks and peers while creating a model for other institutions.
“David’s ideas reverberated beyond Yale as he revolutionized the landscape of institutional investing,” Salovey wrote. “A natural teacher, he prepared a generation of institutional investors who have gone on to lead investment offices at other colleges and universities.”
His contributions to institutional investing are without parallel, said Richard Levin, the former Yale president who first met Swensen in the 1970s in the Yale economics department, when Swensen was a doctoral student and Levin an assistant professor.
“Perhaps more impressive than his contributions was his character,” Levin said in a telephone interview. “Self-confident yet selfless, with the highest integrity. His rectitude was astonishing. He devoted himself to the institution that he loved.”
Levin, who worked with Swensen on the investment committee and as a tennis doubles partner, said character was an important part of how he selected outside firms that invested Yale’s money.
“He would never invest with a manager who he didn’t believe to be scrupulously honest and fair-minded,” Levin said. “People who skated close to the line repelled him. The integrity of his partners was very important to him.”
Swensen invested for the long term. The university has been around for 300 years, and he sought to invest to provide resources for another 300, said Charles Ellis, who knew Swensen for decades and served for 17 years as chairman of Yale’s investment committee.