Yale Boosts Private Equity, Cuts Hedge Funds

Mar 22 2010 | 2:06pm ET

One of the biggest hedge fund investors in the U.S. is cutting back on the asset class.

Yale University’s $16.3 billion endowment has reduced its hedge fund allocation from 21% to 15% to fund increases in its private equity and real estate and commodities portfolios. The former, Yale’s best performing asset class over the past decade, will rise from 21% to 26%, while the latter will be increased from 29% to 37% of the endowment’s assets.

“Alternative assets, by their very nature, tend to be less efficiently priced than traditional marketable securities, providing an opportunity to exploit market inefficiencies through active management,” the school wrote in a report released last week. “The endowment's long-time horizon is well-suited to exploiting illiquid, less-efficient markets such as venture capital, leveraged buyouts, oil and gas, timber and real estate.”

Yale made the allocation changes at its June 2009 investment committee meeting.


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