Like many of the money managers it employs, Yale University’s endowment spent much of last year on the sidelines. But with hedge funds increasing their exposure, Yale plans to boost its exposure to hedge funds once again.
The $19.3 billion endowment, which returned just 4.7% in the year ended June 30, plans to boost its targets for both hedge funds and private equity funds. But it is the latter that will rise more: Yale plans to increase its hedge-fund allocation to 18%; last year, it cut that allocation to 14.5%. The change could mean Yale has more than $600 million to deploy to hedge funds.
Its private equity target will rise to 35% from 34%, while its real-estate allocation will jump from 20% to 22%. Some of the money for the increases will come from the 2.7% Yale had in cash at mid-year; the school hopes to eliminate its cash allocation this year.
Yale’s endowment is among the pioneers in hedge fund investing. It is the second-largest university endowment in the U.S., after Harvard University’s.