Financial Analysts Journal March/April 2015 Volume 71 Issue 2
The British Origins of the US Endowment Model
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)
Elroy Dimson, FSIP, is emeritus professor of finance at London Business School and visiting professor of finance at Cambridge Judge Business School. He also serves as chair of the strategy council for Norwegian Government Pension Fund Global. Professor Dimson has co-authored several books, worked as editor at a number of journals, including the Journal of Finance and Journal of Investment Management, and contributed to the CFA Institute Investment Management Code of Conduct for Endowments, Foundations, and Charitable Organizations. He is also the recipient of the 2011 James R. Vertin Award from the Research Foundation of CFA Institute, for producing a body of research notable for its relevance and enduring value to investment professionals. Professor Dimson holds a PhD from London Business School.