As a Harvard man, it really hurts to admit it, but today, at least, Yale beat Harvard! Amazing and painful, but true!
Today (Sept. 27), Reuters reports that "Yale University said … it earned a 28 percent return on its investments in the last fiscal year, the highest returns earned among America's most prominent universities."
Poor old Harvard achieved only a laggardly 23 percent!
The stellar Yale result was achieved under David Swensen, who grew Yale's endowment to a massive $22.5 billion by June 30, 2007. It is all the more remarkable when one realizes that when Swensen took over the management of Yale's endowment some 22 years ago, it stood at only $1.3 billion.
This means an increase in asset value of some 17.3 times in just 22 years!
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As Reuters says, "That makes Yale's endowment the second largest in the country behind that of Harvard," with $34.9 billion. "Both schools topped the Standard and Poor's 500 indexes, which returned roughly 18 percent during fiscal 2006."
We would like to draw the attention of our readers to two interesting factors. First, one that lends weight to our past recommendations.
The second relates directly to the coming October issue of our sister publication Financial Intelligence Report (FIR), which highlights a discussion on asset allocation.
Our readers will remember that we have favored "real" assets, such as agricultural commodities in our asset allocations. In this respect, it is interesting to note that conventional investment asset classes such as bonds and listed stocks accounts for only 15 percent of Yale's strategic asset allocation.
"Real" assets include real estate and commodities.
[Editor's Note:Earn Mega-Profits as Commodity Prices Continue to Rise]
But Yale also allocates considerable funds to other forms of illiquid investments, such as private equity. To be fair, it must be accepted that, "non-accredited" investors do not have access to these somewhat "exotic" opportunities.
The second fact is that Yale relies exclusively upon outside investment managers to manage (including the tactical asset allocations) of its assets.
Harvard, on the other hand, relies upon its own in-house group of investment managers.
Talking about real assets, Bloomberg reported yesterday that Credit Swisse Standard Securities said, "gold held in exchange traded funds (ETFs) reached 823 metric tons, exceeding the holdings of the Bank of Japan [which held 765 tonnes at year-end 2006]."
Bloomberg goes on to report analyst David Davis as asserting that the gold holdings of ETFs now make them the seventh largest holders in the world, measured against central banks.
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David Davis goes on to refer to the IMF figures as showing that, "It is now apparent that central banks are becoming marginalized, with investment becoming the key source of the bull run."
Those of our readers who have followed our past items on gold will appreciate the very great significance of David Davis' remarks.
Central banks dominated the world's foreign exchange markets until, in the mid 1970s, when free enterprise investors gained the upper hand.
Until now, the gold market has been dominated by the central banks.
Indeed, according to the so-called Central Bank Gold Agreement, the main central banks have coordinated sales of gold, through the IMF, to deliberately distort the price of gold to the downside.
This was done to "demonetize" the yellow metal and make it unattractive to people who want to hold "real" money as opposed to the rapidly depreciating paper of our governments.
[Editor's Note:Four Digit Gold Prices a Reality - Find Out How]
Like our government "cooked" inflation figures, this has led even some eminent commentators to draw erroneous conclusions. The falsely low and erratic price of gold has led some to say that it indicates low inflation and even that it has been a bad investment, over time.
The vital importance of today's news is that it means we are apparently headed for a time when free enterprise investors will gain the dominant hand in the gold market and begin to establish a truly free market price!
Then watch the price roar in times of inflation!
Finally, we should all sincerely salute David Swensen and Yale Endowment on an outstanding investment achievement.
Editor's note:
Four Digit Gold Prices a Reality - Find Out How
Earn Mega-Profits as Commodity Prices Continue to Rise
Will the Liquidity Crisis Sink Your Stocks? 12 Ways to Profit.
