Yale Endowment Launches Incubator Program for New Asset Managers

Yale Investments, which manages the endowment of Yale University, has launched a new program, the Prospect Fellowship, a workshop that aims to help candidates start their own funds, backed by the resources of the university and its network.

The eight-week program is remote, but fellows are expected to be in New Haven, Connecticut, for the first few days of the fellowship, although candidates can remain in the city for the duration of the program if they choose.

The fellowship is betting on “promising individuals who have a differentiated perspective on investments,” according to the fellowship website.

Regarding who should apply, the fellowship site says: “Serious candidates will likely have significant investment experience, although we do not favor one particular candidate profile—you may have developed your skills through life experience, which we find exciting.”

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Fellows will be able to tap into the resources of Yale Investments and its deep connections across investment management. The fellowship intends to assist candidates in every step of starting their own funds through a structured program.

Yale Investments will lend its aspiring fund managers up to $2 million in working capital to assist in building up the new organizations. The endowment will also provide seed funding to fellows; a minimum investment of $25 million will be provided, with another $25 million as a follow-on investment.

In exchange, the endowment requests capacity rights from its fellows and pro rata co-investment rights. Yale will not take stakes in fellows’ investment firms or request revenue share agreements; “we will benefit from the returns that your fund generates, but your company belongs to you and your team,” the program states.

The university is accepting applications for its Spring 2025 cohort of five managers, with a deadline of October 14.

Following the deadline, selected candidates will be invited to a virtual interview to help the Yale investment team better understand the candidates and their plans. Finalists will be selected for in-person interviews in New Haven, and the fellows will be named by the end of the year.

Yale Investments manages the university’s $40.7 billion endowment. Known for its alternative-heavy portfolio, the “Yale Model” was pioneered by Yale’s former CIO, the late David Swensen, favoring higher allocations to alternative investments like private equity. Matt Mendelsohn was named CIO in 2021. The endowment reported earning a 1.8% return for the year and 10.9% for the decade that ended in June 2023.

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Tags: Emerging Managers, Endowments, Yale Investments, Yale University

There is “widespread agreement” among investment professionals that standards for using artificial intelligence in the investment industry are needed and that the current lack of standard is hindering the adoption of AI technologies in investing, according to a survey conducted by the CFA Institute, which awards the Chartered Financial Analyst designation.

The survey, which took place in February, polled 200 representatives of investment firms with assets under management ranging from about $5 billion to about $500 billion.

“Increasing accessibility to large language models is rapidly adding to the pace of the AI-led revolution of the investment industry,” said CFA President and CEO Margaret Franklin in a statement. However, she continued, “the absence of standards and concerns around data privacy may be slowing down AI adoption.”

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According to the survey results, 85% of investment industry representatives polled said there is a need for industry-wide standards and ethical guidelines for AI and generative AI—AI that can create content such as video, images, audio or text. Close to the same share, 82%, said that until such standards are established, they are holding back from using the technologies. In contrast, only 16% of those polled said data privacy and security were the biggest roadblock to their adoption of AI technologies, while 13% said a lack of knowledge and tools were the main reason they are hesitant to use AI.

A large majority of surveyed employers, 70%, said they need workforce training and upskilling regarding regulatory compliance and risk-related skills concerning AI. Nearly half, 47%, said they believe their firms are not well prepared for potential regulatory changes due to AI.

The survey also polled employers about their perception of their workers’ attitude toward the use of AI and found that more than twice as many felt their employees were anxious about AI than excited about it. The CFA Institute reported only 26% of those polled, when asked to name three emotions to describe their employees’ attitudes toward AI, said they felt their employees were excited about the use of AI in investing, while 27% said they believed their workers are confident. Meanwhile, 60% said they believe their employees are anxious about AI, while 48% felt they are resistant and 41% perceived them as skeptical.