For a period of more than 20 years stretching back into the mid-1980s, university endowments seemed blessed by fairy dust. The top three U.S. university endowments — Yale, Harvard and Stanford — consistently returned more than 15% per year over that period.
That changed in 2008, when the top university endowments plummeted by 25% to 30%. The combined losses for Harvard, Yale, Stanford and Princeton reached nearly $23 billion in the 12 months ended June 30, 2009.
Critics pounced, mocking the Ivy League propeller heads and declared that endowment model investing was dead. But despite the flack it caught in 2008, the endowment model has held up surprisingly well. And most importantly, it’s a model you can easily use to boost the investment returns in your own portfolio.
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