Yale is among the finest learning institutions in the world. It is known for many great things, but in the investment world it is probably best known for its top performing endowment, which many try to replicate with what is called an endowment model. What can individuals investors learn from the Yale endowment? Maybe how to not invest if, like most individuals I know, you have to pay taxes.
Over the past 5-10 years, I have seen a large increase in firms selling ultra-high-net-worth investors (individuals and families who have liquid investible assets excluding real estate of $50 million or more), endowment style investment portfolios and limited partnership fund of funds.
Why might this initially appear to make sense? Many ultra-high-net-worth (UHNW) investors have no debt, consume a small portion of their assets for annual expenses, and are really investing for future beneficiaires or to be able to give more in the future to charity. Some have even set up trusts in jurisdictions like Delaware that allow family trusts to run for more than 100 years (so called dynasty trusts). Because of this, UHNW investors commonly view their time horizon for family trusts in generations, not years or decades.
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