Yale boosts PE, real assets allocation

The university’s endowment lost $5.6bn in 2009, a loss driven in part by heavy write downs in its private equity and real asset classes. Yale said over the past 10 years, real assets had delivered 13.5 percent annualised returns.

Yale University increased its allocation to private equity and real assets last year amid a market crisis that led to the endowment losing a total of $5.6 billion for the year.

Yale University

The endowment, with assets totaling $16.3 billion as of 30 June, 2009, increased its target allocation to private equity to 26 percent from 21 percent in 2008, and its target to real assets to 37 percent from 29 percent in 2008. Real assets includes real estate, oil and gas and timber investments.

The endowments actual allocation to private equity is 24.3 percent, and 32 percent to real assets.

Yale sustained heavy losses in the two asset classes last year. Private equity lost 24.3 percent in 2009, while real assets dropped 33.9 percent to become the worst performing asset class of the year.

“The heavy allocation to non-traditional asset classes stems from their return potential and diversifying power,” the endowment said in its 2009 annual summary. “The real assets portfolio plays a meaningful role in the endowment as a powerful diversifying tool and a generator of strong returns.”

Yale said over the past 10 years, real assets had delivered 13.5 percent annualised returns.