Yale Raises Its Private Equity Allocation, But Not By Choice
Yale University's investment office yesterday disclosed that it had voted last June to increase its target private equity allocation from 21% to 26 percent. This came amid mounting private equity losses, but was portrayed by many media outlets as "contrarian" investment chief David Swensen sticking to his guns. In reality, however, Swensen didn't have much of a choice. As of last June, Yale's actual exposure to private equity was at 24.3 percent. That's a major climb from 20.2% the prior year, and nearly 10 percentage points higher than Yale's private equity allocation just four years earlier. In other words, raising the target allocation was largely an effort to reflect reality. "But wait," says rhetorical reader. "Why is Swensen raising the target even above current exposures, other than because he really believes in the asset class?" Well, I'm glad you asked.
