How To Invest Like Harvard & Yale

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I’ve had asset allocation on the brain lately (it’s hard not to with all this volatility), it doesn’t hurt that the stock market has seen some tectonic shifts these last few weeks, and so I turned to an article published earlier this year looking at the asset allocations of college endowments. Specifically, this article looked at Harvard’s exceptional 15% return per annum over the last ten years and Yale’s mind-blowing 17.2% return over that same time period. While I’d be curious to know how they’re doing nowadays, the fact remains that their returns are still laudable and worth investigating.

Harvard & Yale Asset Allocations

Harvard & Yales Investment Allocations

The chart above was pulled from the article and it shows a very simplified view of a very sophisticated portfolio. The first thing that probably jumps out at you is the fact that, in both portfolios, there’s only a mere 12% held in domestic equities – that’s the stock market. Chances are you have more than 12% in equities.

Another significant factoid from that chart is that the largest holding they have is in real assets such as real estate and commodities. Again, chances are you don’t have much invested in real assets (unless you count your house, which is less an investment decision as it was a living decision).

Finally, both have a huge piece in private equity (like hedge funds) and absolute return (assets that are supposed to yield a return in good and bad markets).

How Can You Do This?

Smart Moneys Ivy League Replica Investment Allocations

This one is again from Smart Money and it shows how you can replicate the holdings (or at least get as close as possible) of Harvard and Yale through various funds. Want some absolute growth? PIck up some Hussman Strategic Growth (HSGFX). Want a taste of private equity? PowerShares Private Equity ETF (PSP) will get you into that game.

Worth a shot right? Or go with something simpler like a lazy portfolio. 🙂

A League of Their Own [Smart Money]

{ 7 comments, please add your thoughts now! }

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7 Responses to “How To Invest Like Harvard & Yale”

  1. You could do a lot worse than to imitate one of those great funds – however, keep in mind that their situation is a lot different than yours – they are accepting and paying money out at the same time – for a long, long time. People like you and me contribute to our portfolio for a long time and then stop contributions completely and only withdraw until we kick.

    Another factor is that they have access to investments ie private placements, hedge funds etc that we don’t have. Personally, I don’t think this is a big deal but it makes it hard to imitate their strategies.

    Good post!

  2. Eric N. says:

    Interesting write-up Jim!

    I had no idea what private equity or absolute return was so thanks for the explanation. Their asset allocations definitely don’t look like what a normal person would have. If their returns have been so stellar, I wonder why people haven’t jumped on these lesser-known asset classes or even percentages.

  3. Eric N. says:

    Oh by the way, as an add on, if absolute return guarantees a certain yield (somehow I’m thinking along the lines of a MMF type guarantee..), then what are the downsides to it? Is it something like expenses?

  4. Actually other absolute return funds could be MERFX and ARBFX. If you are interested in managed futures there’s a mutual fund that acts like a hedge fund – RYMFX ( but has steep costs both load and high annual expense)

    For some reason i doubt that PSP is a good proxy for private equity ( maybe because PSP is down 56% YTD)..

    As for timberland another good stock to consider could be POPE resources ( POPE)

  5. IvyLady says:

    Hi, love your blog!

    So I go to an ivy league university in the North and I went to a dinner with the the VP of the University. He gave a speech and the one thing that stuck out to me was his statement that the university had over 3500 bank accounts and hedge funds with the money all divvied up in different ways.

    So a few weeks later I’m reading the university newspaper. It’s a few days after the really nasty ept. 29th fiasco, and I see an article that says “UNIVERSITY TAKES $75 MILLION DOLLAR HIT.” I’m shocked! But then, as I read the article, the financial officer says she’s not worried because they money was from a “junk” account and was not related to the university’s endowment. I just read another article that said 1/2 the endowment is invested in assets other than equities and that despite the craziness of the market, the university has barely been affected.

  6. Brian says:

    Hello and thank you for the interesting article. It would make me feel secure with my money to invest directly into Harvard`s fund and pay a fee for management. Can I deal direcly with Harvard or Yale? Do you know the fees or expenses for this?
    Thank you again.
    Brian N.

  7. jim says:

    No I don’t think it’s possible to invest in these. 🙂

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