‘Self-confident yet selfless’: Yale’s David Swensen dies at 67
David F. Swensen ’80 Ph.D., whose revolutionary approach to managing Yale’s endowment, warmth of spirit, and personal integrity made him one of the world’s most admired institutional investors and a beloved member of the Yale community, died May 5 in New Haven, after a long battle with cancer. He was 67.
Self-confident, selfless, spirited, and guided by a finely tuned moral compass, Swensen assumed management of Yale’s endowment in the mid-1980s, when he was in his early 30s and the endowment stood at $1.3 billion. In the decades to come, he won international renown for an approach to institutional investing that emphasized diversification beyond publicly traded stocks and bonds, especially with illiquid and alternative assets, for his commitment to ethical action in work and life, and for financial results.
Over Swensen’s 35-year stewardship, the Yale Endowment generated returns of 13.1% per annum through June 30, 2020, outperforming the Cambridge Associates mean by 3.4% and a traditional 60% stock/40% fixed income portfolio by 4.3% per annum. In dollar terms, Yale’s performance during Swensen’s tenure translates into gains of $45.6 billion, with $36.0 billion in value added relative to the Cambridge Associates mean. The endowment is now more than $31 billion in assets, and spending from it covers about one-third of the university’s budget.
Widely celebrated outside the university for his pioneering and influential work as an investment manager — and as a mentor for other future top investment leaders — Swensen was also known within Yale as an engaged teacher, a wise and candid counselor, and an enthusiastic university citizen.
An avid tennis player and generous Yale benefactor, Swensen helped raise money through the annual “Swensen Tennis Extravaganza” (which also involved golf), and which raised millions of dollars for Yale’s community-based partnerships. His personal philanthropy advanced many university priorities, including unrestricted giving, scholarship funding, and local partnerships, to name a few. A champion of Yale Athletics, he supported several varsity programs and was among the loudest fans in the stands.
Swensen also encouraged others to give — often organizing special efforts to honor service anniversaries and retirements as well as memorial funds. This led to new professorships, scholarships, and other forms of mission-driven funding at Yale.
“He was an exceptional colleague, a dear friend, and a beloved mentor to many in our community,” Yale President Peter Salovey wrote in a message to the Yale community Thursday morning. “Future generations will benefit from his dedication, brilliance, and generosity.”
Raised in Wisconsin and a graduate of the University of Wisconsin-River Falls, Swensen first came to Yale in 1975 as a graduate student in economics. He worked especially closely with the late Nobel Prize-winner James Tobin and with William Brainard ’62 Ph.D., now the Arthur Okun Professor Emeritus of Economics. Together they advised Swensen on his doctoral dissertation, which examined the valuation of corporate bonds and yielded valuable data for Tobin’s work on company valuations.
After earning his degree, Swensen worked for Salomon Brothers and Lehman Brothers, where he pioneered the development of interest rate swaps. Brainard meanwhile became Yale’s provost, and in 1985 he hired Swensen to manage the Yale endowment.
In the role, Swensen developed and refined an investment approach that came to be known as the “Yale Model.” It transformed institutional investing, and not just at Yale: the model is now the standard for many university endowments and foundations.
Swensen’s ingenuity has been especially and profoundly consequential for Yale.
Said former Yale President Richard C. Levin, who first met Swensen in the 1970s, when the future investment legend was a Yale graduate student and Levin was an assistant professor:
“David Swensen revolutionized institutional investment management; his influence is felt around the world. Under his leadership, the superior performance of the Yale endowment made possible all that we have accomplished in the past 30 years: the rebuilding of the campus, the rejuvenation of downtown New Haven, the internationalization of our student body and academic programs, our commitment to making Yale College affordable for all who are admitted, and our investments in world-class science and engineering.”
Of Swensen the man, Levin said: “Self-confident yet selfless, David was thoroughly devoted to the institution he loved. His judgment about people was impeccable. He set the highest standard of honesty and ethical behavior for himself, and he expected this of all our staff and investment partners.”
Ben Polak, the William C. Brainard Professor of Economics and a former Yale provost, cast Swensen’s achievement this way: “When you walk through Yale today and you look around, what you’re seeing is David’s legacy. The students, and vibrant buildings, and diverse faculty — none of that would be possible without David.”
Swensen built Yale’s Investments Office into a lean, carefully selected mix of about 30 professionals who embody not only skill and ability but also a commitment to Yale’s mission.
“Academic training or work experience in investments was not necessary, but great intellectual integrity and potential were,” said Dean Takahashi ’80 B.A., ’83 M.P.P.M., who first knew Swensen as his freshman counselor in the 1970s and became one of his closest Yale colleagues and friends. “He liked to give everyone a seat at the table. It wasn’t efficient over the short term but paid enormous dividends over the long term. He really emphasized the importance of teamwork and helping each other so the whole team could mentor each other.”
“An amazing aspect of David’s leadership is his ability to inspire all those around him to do their best and to commit to the mission of higher education and charitable work. Yale’s investment partners embraced principles of integrity and serving the public good. Dave led the endowment and institutional investment world, not only in pioneering the Yale model of asset allocation, but also in ethical investment practices and promoting diversity and combating climate change. He was particularly proud that he helped mentor and develop Investments Office staff members to continue their careers with a mission focus.”
No fewer than 15 former members of Swensen’s team have gone on to lead investment offices at other institutions, including, at various times, Princeton, MIT, Stanford, the University of Pennsylvania, the Rockefeller Foundation, Wesleyan University, and Bowdoin College. Some two-thirds of them are women. Smith College recently announced that it had hired Swensen protégé Lisa Howie ’00 B.S., ’08 M.B.A. as its first chief investment officer.
“Astonishingly, of the 15 top-ranked endowments based on performance over the past 10 years, six are managed by Yale Investments Office alumni,” said Takahashi, who served as senior director in the Yale Investments Office for 33 years. (He is now the founder and executive director of the Carbon Containment Lab at Yale School of the Environment.)
Teaching was important to Swensen, both in the classroom and in the Investments Office. On Monday, he and Takahashi taught the last spring semester session of their celebrated seminar course, “Investment Analysis.” Swensen, an elected fellow of the American Academy of Arts & Sciences, led discussion of a new case study.
After co-teaching the course for more than two decades, Takahashi said, the pair could “finish each other's sentences.”
In 2014, when the university presented Swensen with an honorary degree, Polak added two extra words to the formal tribute: “and teacher.”
“He was so happy about that,” Polak said. “For years to come he’d remind me that we added those two words.”
Former Vassar College President Catharine B. “Cappy” Hill ’85 Ph.D., the senior trustee of the Yale Board of Trustees, called Swensen “a consummate teacher and university citizen.”
“All those who have passed through the investment office, engaged with him through the investment committee of the university, or taken one of his courses have benefited from his enthusiasm for educating and mentoring others. His obvious love for and commitment to Yale contributed to the university in many ways, and will be remembered and valued by all those who had the good fortune to know him.”
Through two books Swensen wrote — “Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment” and “Unconventional Success: A Fundamental Approach to Personal Investment” — he also helped the broader investment community learn his way of thinking.
Swensen was deeply and broadly involved in life at Yale beyond the Investments Office. In addition to his teaching in both Yale College and in the School of Management, he continued to serve as a fellow in Berkeley College, where he funded and shared his expert knowledge of beer and wine at tastings, attended university sporting events, and helped honor other members of the Yale community.
“Dave loved the Investments Office softball team, the Stock Jocks,” said Takahashi. “Not only competing in games but the camaraderie afterwards over pizza and beer. After one particularly tough game during which an opposing player smashed his cleats on Dave’s foot at first base, Dave insisted on coming to pizza and delayed going to the emergency room to have the broken bones in his ankle treated.”
Earlier, as college students, Takahashi said, “we used to joke that Dave was the biggest, most enthusiastic freshman even though he was an accomplished graduate student in economics.”
Swensen’s devotion did not go unnoticed. In 2014, Yale awarded him an honorary doctor of humane letters at commencement. In 2012, he received the Yale Medal for outstanding individual service to the university. Earlier, he won the Mory’s Cup for conspicuous service to Yale. Through an effort called The Swensen Initiative, admirers have raised tens of millions of dollars for Yale in his honor. The residence of the head of Berkeley College at Yale is called Swensen House, and the landmark tower of the renovated Hall of Graduate Studies, now known as the Humanities Quadrangle, is called Swensen Tower.
Swensen’s many contributions outside Yale included service as a member of President Obama’s Economic Recovery Advisory Board, and service as a trustee or advisor to the Brookings Institution, Cambridge University, the Carnegie Corporation, the Carnegie Institution of Washington, the Chan Zuckerberg Initiative, the Hopkins School, TIAA, the New York Stock Exchange, the Howard Hughes Medical Institute, the Courtauld Institute of Art, Yale New Haven Hospital, the Investment Fund for Foundations, the Edna McConnell Clark Foundation, and the States of Connecticut and Massachusetts. In 2017 he joined the Council on Foreign Relations.
Swensen, who lived in Connecticut, is survived by his wife, Meghan McMahon, three children, and two step children.
The family requests that donations be made in David's memory to the David Swensen Initiative at Yale. This particular fund supports activities, projects, and people that were especially meaningful to David. Donations can be sent to Yale University, PO Box 2038, New Haven, CT 06521.
“Dave was a legendary pioneering investor and built incredible value for Yale and many other endowments and charities,” said Takahashi. “But to me what was extraordinary and special was how much he loved and cared for his wife, Meghan, family, friends, and Yale, and how he was able to lead and inspire all those around him. I was so incredibly lucky to have him as my Berkeley College freshman counselor in Wright Hall 45 years ago. Since then, he has been my mentor, boss, teammate, co-coach, co-teacher, colleague, partner, supporter, best man for my wife Wendy and me, and best friend.”