Alternative investments
Alternative investments
Podcast
30.4.2025
Many private investors are still investing their wealth as they did 10 years ago - with a focus on liquid asset classes, little diversification and no access to alternative asset classes. Large wealth in particular have been taking a different approach for decades: investing in private equity. One example of this is the famous Harvard and Yale endowment funds, which show what a modern, high-yield investment strategy can look like.
Private investors can also benefit from this approach - provided they have access to the right investment solutions.
Those who build up or manage large wealth think long-term - and invest in asset classes that are still closed to many private investors. Private equity has been at the core of these portfolios for decades. The endowment funds of Harvard and Yale are examples of how this approach works in practice. Harvard has systematically developed its investment approach in recent years and invested more heavily in private equity - in 2024, this asset class accounted for the largest share of the endowment portfolio at 39%1. Yale pursues an investment strategy with a strong focus on non-traditional asset classes, with private equity playing a central role. Around 95% of endowment assets were invested in securities, real assets and private equity in 2024.2
The Harvard and Yale endowment funds are among the most successful of their kind in the world - not only in terms of volume, but also in terms of long-term performance.
In the 2024 financial year, the Harvard endowment fund achieved a return of 9.6%, with the total value rising to an impressive USD 53.2 billion.1
The Yale fund was at 5.7% over the same period and has recorded an average annual return of 9.5% over the last ten years - clear evidence of the stability and efficiency of the Yale strategy.2
Harvard has significantly increased its share of private equity over the past seven years and, in return, has reduced its investments in real estate and commodities. In addition, the risk tolerance has been gradually increased in order to better exploit the return potential of private equity investments. Even though private equity investments in the Harvard portfolio lagged behind the performance of the public markets in the 2024 financial year, Harvard continues to underline the strategic importance of this segment. Private equity remains a key growth driver in the portfolio - with great potential for above-average returns in the long term.1
Yale uses a mixture of venture capital and buyouts for private equity.2 Venture capital involves investing in young, high-growth companies that often offer high risk but also enormous potential for high returns. Yale uses this strategy to benefit from innovative companies that could become leading market players in the future.
Buyouts, on the other hand, refer to the acquisition of mature companies with the aim of optimizing them in order to increase their value. This type of investment offers more stable returns as it targets established, cash flow positive companies. Through these two approaches, Yale combines the potential for high growth with the possibility of stable and long-term value appreciation.
Private equity investments often achieve above-average returns that exceed the returns of purely liquid portfolios in the long term. This is due to targeted investments in companies with high growth potential. The value of these companies can be significantly increased through active management and strategic measures. Added to this is the illiquidity premium that investors receive for their long-term capital commitment.
Compared to listed investments, private equity investments are less affected by short-term market fluctuations. This lower correlation to the financial markets contributes to more stable returns and long-term performance.
Private equity expands the investment universe by providing access to unlisted companies - such as start-ups with innovative technologies or SMEs, which make up the majority of the economy. By investing in different sectors, regions and company phases, the risk is better diversified - and opportunities in different market cycles are exploited.
A key challenge in private equity is the limited access to exclusive funds and experienced managers. Many first-class private equity funds are only accessible to institutional investors. Without the right network or a high minimum capital, many investors have no opportunity to invest in these funds.
Private equity investments are associated with a long-term capital commitment, often over 10 years or more. During this time, investors usually do not have direct access to their capital, as the capital is only drawn down gradually and the investments only increase in value over a period of years. An early exit is often only possible via the secondary market.
The success of the Harvard and Yale endowment funds shows how effective private equity strategies can be for long-term wealth accumulation - and is also highly relevant for private investors. The first important impulse is therefore: private equity should be integrated as an integral part of the personal investment strategy. It is crucial to be aware of the different cycles and to think long-term. Private equity is not an asset class for short-term speculation, but is aimed at investors who have an eye on sustainable performance.
Private equity is all about one thing: Understanding that the most attractive returns can only be realized over long periods of time - ten years or more. For private investors, this means not being distracted by short-term market fluctuations and focusing on long-term asset accumulation.
Another obstacle for many private investors remains the limited access to first-class private equity funds and experienced managers. Unlike large institutions such as the Harvard and Yale endowment funds, private investors often do not have the opportunity to invest in the best funds. This is exactly where specialized partners like FINVIA come in: they create access to exclusive investment solutions and help to overcome the hurdles of this asset class.
Sources:
1Financial Report FISCAL YEAR 2024
2fy24-financial-report-10_25_24.pdf
Endowment funds: Investing like the elite universities Investing Like the Harvard and Yale Endowment Funds
Yale Endowment 2019
Financial Times
Alternative investments
30.4.2025
Jan Hoffmann
Large and institutional wealth in particular has been investing in private equity for decades. Private investors can also benefit from this investment approach - provided they have access to the right investment solutions.
Many private investors are still investing their wealth as they did 10 years ago - with a focus on liquid asset classes, little diversification and no access to alternative asset classes. Large wealth in particular have been taking a different approach for decades: investing in private equity. One example of this is the famous Harvard and Yale endowment funds, which show what a modern, high-yield investment strategy can look like.
Private investors can also benefit from this approach - provided they have access to the right investment solutions.
Those who build up or manage large wealth think long-term - and invest in asset classes that are still closed to many private investors. Private equity has been at the core of these portfolios for decades. The endowment funds of Harvard and Yale are examples of how this approach works in practice. Harvard has systematically developed its investment approach in recent years and invested more heavily in private equity - in 2024, this asset class accounted for the largest share of the endowment portfolio at 39%1. Yale pursues an investment strategy with a strong focus on non-traditional asset classes, with private equity playing a central role. Around 95% of endowment assets were invested in securities, real assets and private equity in 2024.2
The Harvard and Yale endowment funds are among the most successful of their kind in the world - not only in terms of volume, but also in terms of long-term performance.
In the 2024 financial year, the Harvard endowment fund achieved a return of 9.6%, with the total value rising to an impressive USD 53.2 billion.1
The Yale fund was at 5.7% over the same period and has recorded an average annual return of 9.5% over the last ten years - clear evidence of the stability and efficiency of the Yale strategy.2
Harvard has significantly increased its share of private equity over the past seven years and, in return, has reduced its investments in real estate and commodities. In addition, the risk tolerance has been gradually increased in order to better exploit the return potential of private equity investments. Even though private equity investments in the Harvard portfolio lagged behind the performance of the public markets in the 2024 financial year, Harvard continues to underline the strategic importance of this segment. Private equity remains a key growth driver in the portfolio - with great potential for above-average returns in the long term.1
Yale uses a mixture of venture capital and buyouts for private equity.2 Venture capital involves investing in young, high-growth companies that often offer high risk but also enormous potential for high returns. Yale uses this strategy to benefit from innovative companies that could become leading market players in the future.
Buyouts, on the other hand, refer to the acquisition of mature companies with the aim of optimizing them in order to increase their value. This type of investment offers more stable returns as it targets established, cash flow positive companies. Through these two approaches, Yale combines the potential for high growth with the possibility of stable and long-term value appreciation.
Private equity investments often achieve above-average returns that exceed the returns of purely liquid portfolios in the long term. This is due to targeted investments in companies with high growth potential. The value of these companies can be significantly increased through active management and strategic measures. Added to this is the illiquidity premium that investors receive for their long-term capital commitment.
Compared to listed investments, private equity investments are less affected by short-term market fluctuations. This lower correlation to the financial markets contributes to more stable returns and long-term performance.
Private equity expands the investment universe by providing access to unlisted companies - such as start-ups with innovative technologies or SMEs, which make up the majority of the economy. By investing in different sectors, regions and company phases, the risk is better diversified - and opportunities in different market cycles are exploited.
A key challenge in private equity is the limited access to exclusive funds and experienced managers. Many first-class private equity funds are only accessible to institutional investors. Without the right network or a high minimum capital, many investors have no opportunity to invest in these funds.
Private equity investments are associated with a long-term capital commitment, often over 10 years or more. During this time, investors usually do not have direct access to their capital, as the capital is only drawn down gradually and the investments only increase in value over a period of years. An early exit is often only possible via the secondary market.
The success of the Harvard and Yale endowment funds shows how effective private equity strategies can be for long-term wealth accumulation - and is also highly relevant for private investors. The first important impulse is therefore: private equity should be integrated as an integral part of the personal investment strategy. It is crucial to be aware of the different cycles and to think long-term. Private equity is not an asset class for short-term speculation, but is aimed at investors who have an eye on sustainable performance.
Private equity is all about one thing: Understanding that the most attractive returns can only be realized over long periods of time - ten years or more. For private investors, this means not being distracted by short-term market fluctuations and focusing on long-term asset accumulation.
Another obstacle for many private investors remains the limited access to first-class private equity funds and experienced managers. Unlike large institutions such as the Harvard and Yale endowment funds, private investors often do not have the opportunity to invest in the best funds. This is exactly where specialized partners like FINVIA come in: they create access to exclusive investment solutions and help to overcome the hurdles of this asset class.
Sources:
1Financial Report FISCAL YEAR 2024
2fy24-financial-report-10_25_24.pdf
Endowment funds: Investing like the elite universities Investing Like the Harvard and Yale Endowment Funds
Yale Endowment 2019
Financial Times
About the author
Jan Hoffmann
As Head of Alternative Investments, Jan Hoffmann is responsible for portfolio construction and manager selection in the Alternatives segment and is Managing Director of FINVIA Alternative Investments GmbH and FINVIA Alternative Management Sàrl in Luxembourg.
His work focuses on advising private and institutional clients on the development of private equity, private debt and infrastructure portfolios. Previously, he worked for nine years at HQ Trust GmbH - the family office of the Harald Quandt family - as Head of Private Equity and Private Debt. His other positions include UBS Sauerborn, where Mr. Hoffmann was an Associate Director in the Private Equity division. Jan Hoffmann holds a degree in economics (Ruprecht-Karls-University in Heidelberg) and completed a compact study program in private equity at the EBS University of Business and Law (Private Equity Advisor EBS/BAI).
