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Yale's David Swensen, Who Transformed Institutional Investing, Has Died At 67


David Swensen was one of the world's greatest investors, but he's not a household name. And that's because, while he made billions, they weren't for himself. They were for Yale University's endowment, and he showed many other schools how to do the same thing. Swensen died this week at the age of 67 from cancer. NPR's Chris Arnold interviewed him many times and has this remembrance.

CHRIS ARNOLD, BYLINE: David Swensen grew Yale's endowment from $1 billion in 1985 to 31 billion last year. With skills like that, he could have made himself fabulously wealthy. But after an early career on Wall Street, Swensen came back to Yale, where he'd gotten his Ph.D. in economics, to take charge of its investments. I spoke to him about that in 2006.


DAVID SWENSEN: And look. I had a great time on Wall Street, but it didn't satisfy my soul. And I've always loved educational institutions. My father was a university professor. My grandfather was a university professor.

ARNOLD: Swensen, too, taught a class at Yale, and he came across as less like a titan of investing and more like just a very likeable high school math teacher. But pretty soon he was revolutionizing the way universities invest their money. Instead of just buying a simple mix of stocks and bonds, with Swensen, it was also real estate, timber, shampoo and soap companies in Asia. He put seed money into startups. His great insight was that, if done right, a university could make more money with less risk when it invests in so many different types of things. Basically, you had a table with 10 legs - very stable even if a few legs get wobbly.

TOM STEYER: He was incredibly important to me personally.

ARNOLD: That's billionaire investor Tom Steyer, who just ran for president. Early in Steyer's career, Swensen decided to invest some of Yale's money through his hedge fund, and that helped Steyer a lot. Swensen choosing you had become a big stamp of approval.

STEYER: What David did was he pioneered new ways of thinking about investment. He did it with absolute integrity and honor, and he did it for a bigger cause than himself.

ARNOLD: Swensen became known for finding new talent, sometimes people who didn't even have a background in finance.

PAULA VOLENT: I was an art conservator working for museums.

ARNOLD: Paula Volent was in graduate school and asked Swensen for a campus job just filing stuff in the investment office. She wanted to learn a little bit about endowments because she wanted to run a museum someday.

VOLENT: And I went knocking on his door, and he took me in.

ARNOLD: She says Swensen was a good teacher and soon started giving her more and more responsibility. Today she's the chief investment officer at Bowdoin College and says he encouraged her and other women to go into finance.

VOLENT: David was the person that - he never had any doubts that you could do it. And a lot of times he would push you to do things and to be excellent.

ARNOLD: A few years ago, Volent's endowment at Bowdoin actually beat Yale's 10-year return, which Swensen definitely noticed.

VOLENT: He wrote me this letter. It's sort of personal, but it's on my - hold on. It's on my wall.

ARNOLD: She pulls down the framed letter.

VOLENT: And it says, congratulations, Paula. Poor is the pupil who does not surpass the teacher, which is a quote from Leonardo da Vinci.

ARNOLD: Volent's not the only pupil who's done well. Swensen's proteges have gone on to run endowments at many other schools and nonprofits. She says they're called the Yale Mafia but, like, nice mafia. Swensen also wrote a book telling everyday people how to invest and how to avoid pitfalls like excessive fees charged by mutual funds. It's called "Unconventional Success." And Volent says Swensen was just also enthusiastic and fun. He got everybody to play on the office softball team. When they'd be up all night doing a big mailing, he'd often show up with a keg of beer.

VOLENT: He just loved being around people. Yeah, he's going to be sorely missed.

ARNOLD: David Swensen was 67 and had been battling cancer for years. He taught a class just two days before he died.

Chris Arnold, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.