What is the Yale Model in finance?

  • Also known as the endowment model or the Harvard model, this refers to the investment strategy followed by many popular endowment funds created by institutions like universities, hospitals and other non-profit organisations.
  • It emphasises the importance of diversifying an investment portfolio equally across multiple asset classes to control risk, but with a special focus on investing in alternative assets that can offer higher returns to its investors.
  • The Yale model was proposed and popularised by David F. Swensen, the chief investment officer of Yale University, who elaborated on it in his 2000 book Pioneering Portfolio Management.


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