Criticism of The Endowment Model
After Harvard’s endowment dropped a record 30% to $26 billion in the year ended June 2009, an 81 page report released in May 2010 found that "The endowment model of investing is broken. Whatever long-term gains it may have produced for colleges and universities in the past must now be weighed more fully against its costs — to campuses, to communities and to the wider financial system that has come under such severe stress.”
In a video interview, Mark W. Yusko founder of Morgan Creek Capital Management, LLC one of the veterans of the endowment investment model, claims that one year where endowments did not outperform but rather "tie everybody else" does not break the endowment model. The endowment model is still the most viable proposition for long-term investors. Investors would also realize that mark-to-market reporting has a bigger impact on reported performance than before.
Read more about this topic: David F. Swensen
Famous quotes containing the words criticism, endowment and/or model:
“When you overpay small people you frighten them. They know that their merits or activities entitle them to no such sums as they are receiving. As a result their boss soars out of economic into magic significance. He becomes a source of blessings rather than wages. Criticism is sacrilege, doubt is heresy.”
—Ben Hecht (1893–1964)
“The parent must not give in to his desire to try to create the child he would like to have, but rather help the child to develop—in his own good time—to the fullest, into what he wishes to be and can be, in line with his natural endowment and as the consequence of his unique life in history.”
—Bruno Bettelheim (20th century)
“For an artist to marry his model is as fatal as for a gourmet to marry his cook: the one gets no sittings, and the other gets no dinners.”
—Oscar Wilde (1854–1900)