The British Origins of the U.S. Endowment Model

13 Pages Posted: 21 Dec 2014 Last revised: 20 Mar 2016

David Chambers

University of Cambridge - Judge Business School, Department of Finance & Accounting

Elroy Dimson

University of Cambridge - Judge Business School; London Business School

Date Written: February 1, 2015

Abstract

The US endowment model is an approach to investing popularized by Yale University that emphasizes diversification and active management of equity-oriented, illiquid assets. The writings of the British economist John Maynard Keynes were a considerable influence on the investment philosophy of Yale’s chief investment officer, David Swensen. How did Keynes gain these insights? We track Keynes’s experiences managing the King’s College, Cambridge, endowment and show how some of the lessons he learned remain relevant to endowments and foundations today.

Keywords: Long horizon investing, Yale, Keynes, Investment strategy, illiquid assets

JEL Classification: B26; G20; G23

Suggested Citation

Chambers, David and Dimson, Elroy, The British Origins of the U.S. Endowment Model (February 1, 2015). Financial Analysts Journal, Vol 71, No 2, pages 8–12, 2015. Available at SSRN: https://ssrn.com/abstract=2541034

David Chambers (Contact Author)

University of Cambridge - Judge Business School, Department of Finance & Accounting ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
44 (0)1223 339700 (Phone)

Elroy Dimson

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 20 7000 8212 (Phone)
+44 700 607 7390 (Fax)

London Business School ( email )

Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
44 20 7000 7000 (Phone)
44 700 607 7390 (Fax)

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