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February 18, 2009

David Swensen on Yale, Consultants, Treasuries, etc.

Good interview with Yale CIO David Swensen up at ProPublica. Some excerpts follow, and the full piece is here.

On consultants

Having a consultant is very easy compared to going out and trying to find two or three high-quality professionals to manage your endowment.

On marking Yale portfolio to market

In Yale’s case, we only mark the portfolio to market once a year, on June 30. That’s the only number that matters. It matters for determining spending. It matters for financial disclosure purposes. That number that we get on June 30 only determines 20 percent of our spending. The other 80 percent comes from an averaging process. Obviously, we’re concerned about what’s happened since June 30th, and it influences our view of where we’re going to end up next June 30, but where we are today and where we were last month and the month before, in some sense, doesn’t even factor into our spending calculations.

On Treasuries

I'd say U.S. Treasuries are incredibly unattractive. That's not hard. Pretty much everything else is very attractive. Distressed credit is a pretty obvious opportunity. The dysfunction in the credit markets is creating some extraordinary opportunities right now.

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