THE Yale Endowment Model

1. In 1990, Yale Became the first institutional investor to make "Absolute Return"  a Distinct Asset Class. This became the "code word" for Hedge Fund activity in a portfolio. 

2. Who did Yale look towards first to develop their absolute return strategies? The highly respected Tom Steyer of Farallon Asset Management.  

3. An ex-presidential candidate, Tom Steyer received his bachelor's degree from Yale. Before starting at Farallon Asset Management in January 1986, he worked at Morgan Stanley, Goldman Sachs and Hellman & Friedman in private equity.  

4. In 1987 Steyer approached David Swensen, Yale's CIO, to manage a portion of Yale's endowment for no fee. After Steyer's initial success, other college endowments began to take notice once he became the dedicated investment manager.  

5. Because of Yale's prolonged success creating consistent returns with low volatility, almost every other Ivy League Endowment emulated Yale. The model ultimately pioneered alternative investing with hedge funds and private equity in the endowment space. The current Yale Endowment is 40+ Billion, with a large amount of their success contributed to Steyer's investment model.