The Yale approach, implemented when Swensen took over the University's investment fund, follows a relatively simple model. The management portfolio is subdivided into 5 or 6 segments with similar or equivalent weighting. Each segment is invested in a different asset class, particularly in private assets, alternative investment classes and illiquid assets. The goal of this model is to maximize performance to cover inflation as well as the University's expected expenses, which exceed 7% annually. To achieve this performance in a sustainable manner, it is crucial to invest in uncorrelated assets and actively manage this allocation, all while minimizing volatility. Eliminating the liquidity constraint was central to the model’s success.

The model has been widely praised for its long-term success while reducing the average volatility of portfolios, which can be a significant source of stress for end clients and often necessitates increased communication from intermediaries.

Source : https://guidefinances.com/2021/07/16/what-is-the-endowment-investment-model/