Endowment model

Endowment model — David Swensen’s Yale design: minimize bonds and cash, maximize equity-like assets, and deliberately hold illiquid private assets (PE, VC, real assets) to harvest the illiquidity premium. Yale compounded at 13.7% for 36 years; the average endowment copying the model performed like a worse 60/40, because the edge was top-decile manager access, negotiated fees, and a permanent horizon — none of which are for sale. The one copyable insight: your own illiquid business already is your endowment allocation.

First used in: 5.4 · The endowment model, honestly