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Abstract

The US endowment model is an approach to investing popularized by Yale University that emphasizes diversification and active management of equity-oriented, illiquid assets. The writings of the British economist John Maynard Keynes were a considerable influence on the investment philosophy of Yale’s chief investment officer, David Swensen. How did Keynes gain these insights? We track Keynes’s experiences managing the King’s College, Cambridge, endowment and show how some of the lessons he learned remain relevant to endowments and foundations today.

About the Author(s)

David Chambers
Elroy Dimson
Elroy Dimson FSIP, PhD

Elroy Dimson is chair of the Centre for Endowment Asset Management at Cambridge Judge Business School. His research focus is long-horizon investing and responsible investing, and his publications are on active ownership; investment management; endowment strategy; environmental, social, and governance investing; and financial market history. Professor Dimson’s books include Triumph of the Optimists, Global Investment Returns Yearbook 2020, Financial Market History, and Endowment Asset Management. His recent articles are on art investment, active ownership, real assets, financial history, endowment strategy, factor investing, fossil-fuel divestment, and asset management. Professor Dimson is chair of the advisory and policy boards of FTSE Russell and serves on the Supervisory Council of the Geneva Finance Research Institute, the Review Board of CFA Institute Research Foundation, and the Investment Committee of Gonville & Caius College, University of Cambridge. Previously, he served as chair of the Strategy Council of the Norwegian Government Pension Fund Global and as a professor and governor at London Business School. Professor Dimson is a fellow or honorary fellow of CFA UK, the Institute of Actuaries, the Royal Historical Society, the Risk Institute at Ohio State University, and Gonville & Caius College. He is emeritus professor of finance at London Business School, where he earned his PhD.

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