STREET DOGS: Yale’s investment strategy
In its annual investment report Yale University defended the fees it pays to external managers
From an article by Janet Lorin at Bloomberg.com Yale University, one of the best-performing college endowments, defended the fees it pays to external managers, saying in an annual investment report that a low-cost passive strategy would have "short-changed" the Ivy League school’s students and faculty. While declining to provide details about how much the fund pays, its managers earn "large performance-based fees", the report said. The $25.4bn endowment … returned 3.4% in the last fiscal year when college endowments lost 2% on average. Fees for private equity and hedge fund managers, some of whom command 2% for management and 20% for performance, or even more, have become a heated topic. Berkshire Hathaway’s Warren Buffett and writer Malcolm Gladwell have taken public shots at the structure, and Gladwell specifically targeted Yale two years ago. "What Buffett, Gladwell and other fee bashers miss is that the important metric is net returns, not gross fees," the report said. "Weak or ...
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