News of outstanding returns on Yale’s endowment came as the university’s chief investment officer was already riding a wave of favorable publicity. David F. Swensen, Ph.D. ’80, had recently published his book Unconventional Success: A Fundamental Approach to Personal Investment (Free Press), and finance journalists were calling him the best money manager in academia. They pointed to Swensen’s track record as manager of Yale’s endowment over the past 20 years, which has seen average returns of 16 percent. For the 2004 fiscal year, the endowment earned returns of 22.3 percent, bringing total assets to $15.6 billion. And under Swensen’s leadership, the Yale endowment routinely outperforms Standard & Poor’s 500. He credits his success to a nontraditional asset allocation with an emphasis on equity investments.

In numerous interviews with the press, however, Swensen cautioned that individual investors are unlikely to reap his returns, even if they read his book. Those who spend a few hours a week on their portfolios simply can’t compete with institutions such as Yale that have a team of full-time professionals actively managing the endowment.

“The outstanding performance by the investments office in the past year has matched a record of achievement over time that has earned David Swensen and his colleagues the highest possible praise and admiration from their peers,” President Richard C. Levin said in a press release. “Yale’s capacity to fulfill its ambitious mission has been greatly enhanced by their superb stewardship of the endowment.”

Because of Swensen’s efforts, the endowment’s share of the university’s operating budget has more than doubled over the past decade. The endowment now contributes almost a third of the university’s revenues—$610 million this fiscal year—the largest single source of support.