Definition of endowment model

Similar to the Yale Model, the endowment model allocates a significant portion of assets to non-traditional asset classes such as absolute return, private equity and real estate.

Endowments typically believe that less liquid assets provide a good source of excess returns and that an unlimited time horizon allows them to bear the liquidity risk of such investments. This assumption was called into question when several endowments struggled to meet their institutions’ cash requirements during the credit crisis of 2007-2009. [1]

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