Yale University has embarked on a program of aggressive alternative investment through its substantial endowment fund. From Puerto Rican government bonds to New Hampshire timber, the university is betting the house on non-typical investments.
A Bloomberg report on October 5, 2018, makes it clear, however, that the university’s biggest alternative investment play is in cryptocurrencies.
What’s in it for Yale?
Yale, which has America’s second largest college endowment fund, surpassed only by Harvard has reportedly invested in Paradigm, a new crypto-focused fund worth $400 million according to the report. Founded by Coinbase co-founder Fred Ehrsam and ex-VC figures Matt Huang and Charles Noyes, Paradigm represents a massive statement of intent from Yale, whose $30 billion endowment is headed by renowned fund manager David Swensen.
While the exact amount invested by Yale is yet to be confirmed, many crypto market observers hope that this signals yet another step on the road to large-scale institutional entry to crypto markets, which will put an end to the prolonged market downturn.
Yale plans to invest 60 percent of its assets in the 2019 fiscal year in alternative investments like crypto funds. Yale apparently, has developed a history of winning bets on alternative investments, entering such markets ahead of its peers who tend to focus on traditional stocks, bonds, and shares. The university is confident that crypto investment will see it reprise its successful alternative investment strategy.
Yale Goes Crypto
Under the guidance of David Swensen, Yale’s endowment fund hopes to reprise his three decades of near-unmatched success in managing college endowments. His investment model centers around longer time horizons and committing capital to less liquid assets such as private equity and lately, cryptocurrency funds.
With an endowment worth $30 billion out of the total U.S. college endowment of $550 billion, Swensen has helped Yale to consistently return 11.8 percent over the past 20 years. The investment in Paradigm, going by his well-honed strategy, will likely be followed by investments in other crypto-focused funds which invest in tokens, other crypto funds, and blockchain companies.
In addition to its new investment in Paradigm, Yale has long been an investor in Andreessen Horowitz, which is a large scale crypto investor in its own right, having recently launched a $300 million crypto fund which Yale also invested in.
Featured image by Almasty