The Anti-Yale-Model Endowment: Inside King's £341m Fund

The Yale Model, and why King's rejected it

US endowments are built on the "Yale Model" pioneered by David Swensen: accept illiquidity, and load up on private markets to harvest the illiquidity premium. The largest American funds now hold 50 to 75 per cent of assets in alternatives. Harvard runs roughly 39 per cent private equity and 32 per cent hedge funds, with just 14 per cent in public equities. Across the whole US endowment universe, private equity is the single biggest allocation.

King's does almost the opposite. Unusually for a UK institution, it publishes its full fund-by-fund holdings as an appendix to its Ethical Investment Policy, so we can see exactly what it owns. At 31 July 2025, the portfolio of roughly £322m was around 65 per cent global listed equities and 9.5 per cent emerging-market equities. Private equity was only about 5.5 per cent, property around 4 per cent, with the rest in credit, inflation-linked bonds, gilts and cash. There are no hedge funds and no infrastructure at all.

This is a deliberate choice, and a reasonable one. Below roughly £500m, the fee drag, liquidity demands and operational burden of a deep alternatives book are hard to justify. King's runs its money through a committee-plus-consultant structure advised by Cambridge Associates, rather than an in-house investment office like Harvard Management Company or Oxford's OUem.

The alternatives that do exist

The private-equity sleeve is small but genuinely institutional, and worth knowing by name. King's accesses it entirely through funds-of-funds and secondaries vehicles: Accolade Partners on the growth side, HarbourVest's Dover Street secondaries funds, and LGT Crown's Global Secondaries series. The only real-asset exposure is a single holding in the Savills Charities Property Fund. For a society focused on alternatives, this is a clean case study in how a smaller institution gets diversified private-markets exposure without building a direct programme.

The cost of diversification

Here is the line that should interest every finance student. In its 2024 financial year, the endowment returned 9.4 per cent, a perfectly respectable number that nonetheless trailed its own benchmark of 14.5 per cent. King's explained why in its accounts: the fund "has not mirrored the market concentration of funds in US mega-capitalised stocks." A diversified, value-tilted, ESG-screened portfolio simply could not keep pace with a benchmark carried by the Magnificent Seven. It is a textbook illustration of the trade-off between diversification and momentum, playing out on the university's own balance sheet.

Ethics, activism and the live tension

King's reached full fossil-fuel divestment in early 2021, nearly two years ahead of its own target, after the student-led Fossil Free KCL campaign. It hit a separate goal of putting 40 per cent of the endowment into socially responsible investments in 2023, also two years early. In 2024, following Gaza solidarity encampments, it added a controversial-weapons exclusion, though it declined to divest from conventional arms or from pooled funds. That ongoing tension — between ethical screening and the fiduciary duty to maximise risk-adjusted returns — is the defining governance question for any modern endowment.

What it means

King's endowment covers only about a quarter of one year's £1.4bn income. Like almost every UK university, it leans on tuition fees and government grants, not investment income, in a way no major US institution does. The endowment is a useful supplement that funds scholarships, endowed chairs and research through a roughly 4 per cent annual drawdown — not a financial engine. Understanding why is half the lesson in how British higher education is actually paid for.