Steep investment losses have caused painful cutbacks at some of the nation’s best-known universities over the most recent fiscal year and have prompted questions about whether their endowments are taking too much risk, reports the New York Times. But as the schools disclose their numbers, the managers of these endowments are indicating their continued support for a diversified portfolio full of alternative investments like hedge funds, private equity, and real estate–the very things that have caused so much trouble. This portfolio strategy is sometimes called the Swensen model, after David F. Swensen, who heads the Yale endowment. On Sept. 22, Yale disclosed the details of its year, reporting an investment loss of 24.6 percent, compared with an average drop of 17.2 percent for large funds, according to the Wilshire Trust Universe Comparison Service. Yale pointed out that even after its latest loss, it has produced an average annualized gain of 11.8 percent over the last 10 years. According to Wilshire, the average return during that period was 4.3 percent for endowments with more than $1 billion in assets. "Just how unhappy fiduciaries are with the returns last year depends on whether they are focusing on one-year returns or 10-year returns," said one endowment head who did not want to be quoted by name, speaking about investment strategy…

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