Celebrating David Swensen’s life and legacy
David Swensen’s investment prowess was legendary. His pioneering approach to the Yale endowment made him one of the world’s most renowned and influential institutional investors. But within the Yale community, Swensen ’80 Ph.D., was equally well-known and admired for his teaching and mentorship; his love for Yale and enthusiastic support of its students, faculty, and athletic teams; his generosity and personal philanthropy; and his devotion to his family.
On April 10, family, friends, former students, and colleagues gathered in Woolsey Hall to celebrate the wide-ranging legacy and impact of Swensen, Yale’s longtime chief investment officer, who died in May 2021 after a long battle with cancer. (The celebration was also live cast for a virtual audience.)
“When I see David in my mind’s eye, I don’t see him seated at his desk or at a meeting,” said Yale President Peter Salovey, who delivered the greeting. “Because our community was so central to who David was, and knowing what was important to him, I see him standing at the front of a classroom teaching ‘Investment Analysis.’ I see him sitting behind me in the Yale Bowl, in a sweatshirt and Yale cap cheering his heart out for the Bulldogs, as the wide receiver catches the ball over the goal line. I see him a few seats down from me at John Lee [Amphitheater], standing up at a bad call just one inch from the line the referees dared him to cross.
“I see him proudly sitting on the stage at Commencement in his blue gown and black cap and gold tassel; the band was playing, the flags were flying, and the students he cared so much about were marching forward into the Commencement theater.”
The afternoon’s speakers, as well as a wide community who spoke in video tributes, captured Swensen’s uncommon ability to connect deeply with those around and to elicit excellence, whether in Yale’s Investments Office, the classroom, or the softball field (much tribute was paid to the Investments Office’s team, the Stock Jocks).
It began with what he demanded from himself. “David adored Coach Vince Lombardi, who said that the measure of who we are is what we do with what we have,” Stephen Swensen, his brother, recalled. “And David took that to heart.”
In a video reminiscence, Swensen’s friends and family recalled his precocity as a child; his zeal as an athlete; and his irreverent sense of humor. (The famous beer tastings that he hosted for years in Berkeley College and other colleges originated in an attempted prank on then Berkeley head of college Robin Winks.)
After graduating from the University of Wisconsin-River Falls, David Swensen arrived at Yale in 1975 as a graduate student in economics. It was then that he worked closely with the late Nobel Prize-winner James Tobin and with William Brainard ’62 Ph.D., now the Arthur Okun Professor Emeritus of Economics. After stints at both Salomon Brothers and Lehman Brothers, he left Wall Street behind to lead Yale’s investments office in 1985, the beginning of a tenure that would last 35 years.
During those years Swensen developed an investment approach that came to be known as the “Yale Model,” which emphasized diversification and long-term thinking. The result, over the duration of his leadership, was over $50 billion in value added relative to the average endowment.
“Dave’s mission to excel in endowment management required not just investing financial capital but essentially investing in people,” said Dean Takahashi ’80 B.A., ’83 M.P.P.M., a close friend and collaborator, 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, which is based at Yale School of the Environment.) “He made it great fun to be with him. And when you were on his team, you made sure to try your hardest and do your best. You didn’t want to disappoint Dave.”
Together, adopting the principles of modern portfolio theory espoused by Tobin and his fellow Nobel laureate Harry Markowitz, Swensen and Takahashi pioneered an approach to endowment investing that has had enduring effect on the world of institutional investing.
They also partnered as teachers of “Investment Analysis,” a seminar they co-instructed for 35 years. (In a video, Benjamin Polak, Yale’s William C. Brainard Professor of Economics, described the class as “harder to get into than ‘Hamilton,’ and probably better choreographed.”)
“Those fortunate to have learned from David Swensen viewed him as the most transformational teacher they met at Yale,” said Marvin Chun, the Richard M. Colgate Professor of Psychology, professor of neuroscience and cognitive science, and Yale College dean, who also served for nine years as head of Berkeley College. “David as a teacher not only imparted knowledge, he also instilled purpose. He inspired students to be like him, creating resources for noble causes.”
In addition to lecturing at both Yale College and Yale School of Management, Swensen was renowned for his mentorship of the next generation of institutional investors; 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.
Swensen also shared his wisdom more widely, through his books, “Pioneering Portfolio Management: An Unconventional Approach to Institutional Investment” and “Unconventional Success: A Fundamental Approach to Personal Investment.” When the former came out, Takahashi recalled, “many wondered if it was a mistake to publish the playbook for the Yale Model. Why give away the secrets of Yale’s successful investment approach?
“It’s because Dave cared so deeply about investing in education.”
Swensen’s leadership of the endowment also had incalculable impact on the university. His successful approach to investing boosted the endowment’s spending from $45 million, approximately 10% of the budget, when he began, to $1.6 billion in the current fiscal year, representing approximately 33% of the operating budget. As Chun noted, those returns helped make Yale College one of the most accessible in the Ivy League, with a higher proportion of first-generation and low-income students than most of its peers.
“David’s impact on this institution, on others like it, and on the field of investment management was without peer or precedent,” said Richard Levin, former Yale president, who first met Swensen in the 1970s, when the latter was a Yale graduate student and Levin was an assistant professor. “For those of us here today, his impact was more personal. He is remembered as our friend, teacher, mentor, team builder, team leader, partner, and moral exemplar.”
Penelope Laurans, a senior adviser at Yale, read the poem “In Range of Bells” by Marie Borroff ’56 Ph.D., the late Sterling Professor Emerita of English in Yale’s Faculty of Arts and Sciences, which describes a walk down Prospect Hill to the ringing of the chapel bells at the Divinity School — and, as Laurans put it, conveys the author’s implicit love of the place and of “what it is that makes your life worthwhile.”
“David adored life in the Yale community,” Laurans said. “He relished walking around the campus, his campus, the one he and his colleagues helped to improve and grow.”
For those closest to him, Swensen’s overwhelming legacy was his desire to be the best he could be, not only in his work but as a husband, a friend, and a father to his three children and two stepchildren.
“I think that’s the side that surprises me the most,” said his son Timothy Swensen, recalling his father’s devoted presence at practices and games, bedtimes and camping trips. “That someone can succeed so much at his job, at his vocation, at his calling, that he can be Mr. Yale, and yet be our dad.”
And whatever life threw his way, Swensen remained dauntless. “David was unafraid,” said Meghan McMahon ’87, Swensen’s wife. “He faced unimaginable challenges with courage, with thoughtfulness, with grace, and always, somehow, with humor.”
McMahon recalled a time in 2009 when her son had a “profound existential crisis,” which expressed itself in late nights asking his mother unanswerable questions. After one such night, McMahon met Swensen for their usual breakfast, where she described her son lamenting his fate as a tiny speck in the universe. Swensen, McMahon remembered, advised with a smile, “Just tell him to be the best speck that he can possibly be.”
To bring the celebration to a close, McMahon said, “I’d like to have David send us off.” A recording of Swensen’s voice rang out into Woolsey Hall: “So how fun was that? Thank you so much.”
Video of the celebration may be viewed here.