Top Highlights

• Yale continues to demonstrate that the best defense in free and dynamic markets is neither fixed nor cautious, but rather, is resourceful, bold, and active on every level.
• Yale’s portfolio structure strategy and explicit assumptions are stress-tested in three different ways: Simulated returns are forced through a variety of possible “nightmare” scenarios; the Investment Committee devotes a full meeting each year to challenging every aspect of the portfolio structure in the classic tradition that only the well-tested ...
• The obvious risks in manager selection are two: hiring managers at or after their best results and terminating managers at or near their nadirs. Yale carefully avoids short-term “dating” relationships and strongly favors long-term, continuing “marital” commitments to very carefully chosen managers, often hiring them at an early stage in their devel...
• Each new manager is recommended through a formal memorandum that details all “due diligence” research; explains the manager’s record, investment philosophy, and decision-making process—and the strengths or limits of its organization; and provides the personal/professional record of each principal. Each of these in-depth background briefings—typical...
• I have come to believe that the most important distinction in the investment world does not separate individuals and institutions; the most important distinction divides those investors with the ability to make high quality active management decisions from those investors without active management expertise.