Trinity’s Student Management Fund (SMF) hosted a talk by the Chief Investment Officer of Yale University, David Swensen, this week. During the event, Swenson examined his professional background before providing insight into his methods of investment for the Yale University endowment and giving advice for individual investors. The talk was concluded by the official presentation of the SMF Contribution to Finance Award by SMF’s Chief Executive Officer Marie-Louise O’Callaghan.
Ronan Smith, the Chief Operating Officer of Trinity SMF and organiser of the event, gave the introduction to the talk. Smith admitted that he had sent the invitation with very little expectation that it would be accepted. However, Swenson jokingly declared that he was convinced to attend by the idea of a pint real Irish Guinness on tap in Dublin. Swensen’s sense of humour brought a certain personality to the otherwise highfalutin talk, adding to his dynamism as a speaker.
David Swensen has held the position of Chief Investment Officer at Yale University since 1985, despite not having any practical experience in portfolio management prior to the role. Apparently he contacted a company that specialized in portfolio management and was able to learn more about what was involved before taking up the job offer. Finances are very important for university owners, so it was crucial that David had knowledge of portfolio management. He managed to secure a 20-year-long streak of consecutive positive returns, which was only broken in 2008 during the financial crisis. Currently, under Swenson, the Yale endowment stands at $29.4 billion and is used to cover 34 per cent of the entire university’s budget. In addition to this, Swenson also held a position on former US President Barack Obama’s economic recovery advisory board from 2009 until 2011 – an appointment he called his “proudest” professional achievement.
The talk began by Swensen recounting his career previous to taking up his post at Yale, before diving into the practicalities of the Yale Model of investment. While the model is at times referred to as the Swensen Model, Swensen modestly established his preference for the term “Yale Model”.
After examining the university’s approach to investment, Swensen then turned to describing the model he advocates for individual investors. He repeatedly stressed the importance of obtaining a diverse portfolio and gave extensive advice in the event of a market crash. His 2005 book Unconventional Successes outlines this approach in greater depth, while his previous book Pioneering Portfolio Management details the intricacies of the Yale Model. Smith stressed the significance of both books in his introduction, claiming that they “should be required reading for any aspiring investor”.
The talk was both engaging and exceptionally detailed, and while this may have resulted in the content being somewhat inaccessible to novices in the field of investment, it was certainly well received by the audience. It undoubtedly will have been beneficial for members of Trinity’s SMF, as the society itself manages a €100,000 investment fund. As Marie-Louise O’Callaghan observed during the final presentation of the award, the talk was “truly thought provoking” and the questions-and-answers session that followed Swensen’s talk gave students the invaluable opportunity to pick the brain of the an known as “Yale’s in-house Warren Buffet”.
