Yale’s endowment, which topped $15 billion this year, may see one of its most significant sources of investment returns wane if the market follows predicted trends.
Leading Yale economists and investment officials recently echoed national concerns that hedge funds — which, as a part of the absolute return asset class, make up approximately a quarter of theUniversity’s endowment — show signs of declining performance.
The hedge fund boom that Yale and Harvard are credited with helping create may be on the decline, Yale School of Management professor William Goetzmann said.
“As hedge funds increasingly chase the same strategies, there are fewer anomalies to exploit,” Goetzmann said in an interview. “So managers will find it much harder to produce exceptional returns … Ithink there has been a flattening out of the performance of hedge funds on average.”
