You know that institutions are looking to offload their private equity holdings onto you, the retail investor, by “allowing” you to hold them in your 401(k). Gee thanks! This comes at a time when the excess returns private equity assets have long boasted about have mostly disappeared. In The Wall Street Journal, Burton G. Malkiel explains the rise and fall of private equity in Yale University’s endowment. The strategy was originally the brainchild of famed endowment manager David Swenson, but recently, it’s not doing so well. Malkiel explains:
During the decade 1999-2009, the Yale endowment performed brilliantly, earning an average annual return of 11.8%. A publicly traded portfolio of all equities earned a negative rate of return in the same period. The Yale portfolio continued to outperform more moderately through 2021, when Swensen died. But in recent years, the generous excess returns from alternative investments disappeared. In the period 2022-24, the Yale portfolio underperformed the S&P 500 by an average of more than 8 percentage points a year. And when Yale sold a significant portion of its “alternatives” portfolio in 2025, it sold at a slight discount from its carrying value, raising the possibility that valuations of some of these investments might be inflated.
Your Survival Guy is all for long-term investing and not relying on the fluctuating prices of assets to “win.” But liquidity is something that is very important to Your Survival Guy. Publicly traded securities with liquid markets give investors greater access to their money when they need it for their Retirement Lives.
Action Line: When you want to talk about a diversified portfolio of assets and your retirement, email me at ejsmith@yoursurvivalguy.com. And click here to subscribe to my free monthly Survive & Thrive letter.
