Invest Like an Institution: The Endowment Model for Private Investors
Invest Like an Institution: The Endowment Model for Private Investors
By Lincoln West
When most investors think about building wealth, they turn to the familiar stock and bond markets. A traditional 60/40 portfolio has long been the standard approach to balancing growth and risk. But for the world’s most sophisticated investors such as endowments, foundations, and family offices…this is just the beginning.
The Endowment Model Advantage
Major universities such as Harvard, Yale, and Princeton have pioneered what’s now called the “endowment model” of investing. Rather than relying solely on public equities and bonds, they diversify deeply into alternative investments like private equity, venture capital, hedge funds, private credit, real estate, and energy programs.
The results speak for themselves. In fiscal year 2021, many Ivy League endowments generated 40–50% returns, dramatically outpacing the ~20% return of a traditional 60/40 stock–bond portfolio. The key difference? Their portfolios were often more than 50% allocated to alternatives, compared to the mostly none-existent exposure of most individual investors.
Why Family Offices Follow Suit
This isn’t just an Ivy League phenomenon. Family offices, the private wealth hubs of ultra-high net worth individuals, are increasingly adopting the same strategy. On average, they now allocate around a considerable amount of their portfolios to alternatives. Their reasoning is clear: alternative assets can provide smoother returns, lower correlation to the stock market, and long-term compounding that public markets alone can’t match.
Making Alternatives Accessible
Traditionally, access to these investments was reserved for billion-dollar institutions and the ultra-wealthy. High minimums and exclusive fund structures created barriers for many individual investors. Today, that’s changing. Through specialized funds, registered investment advisors (RIAs), Broker-Dealers, Reg D offerings, and pooled structures, high-net-worth families can now participate in the same types of opportunities once limited to endowments and family offices.
At Legacy Wealth Management, we specialize, in conjunction with our partner, in sourcing, vetting, and providing access to private (off stock market) investments in areas such as:
Private Equity & Venture Capital – Ownership in innovative businesses before they hit public markets.
Real Estate – Institutional-quality properties offering income and appreciation potential.
Oil & Gas Programs – Strategies that combine cash flow with unique tax advantages.
Private Credit – Lending to private companies with yields often exceeding public bond markets.
The Takeaway
For investors seeking to “invest like a billionaire,” the lesson from the endowment model is clear: diversification into alternatives is an important stabilization tool that we believe is essential. By carefully integrating private investments into a portfolio, we believe individuals can pursue stronger, more resilient long-term growth.
The question is no longer if alternatives belong in your portfolio, but how to access them intelligently. We suggest you speak with an advisor to start to understand the changes that may need to happen in your portfolio!
Lincoln West
Wealth Advisor | Legacy Wealth
The information contained herein is provided for educational purposes only and the information should not be construed as a provision of personalized investment advice. Under no circumstances should this information be construed as an offer to sell or a solicitation of an offer to buy a particular product or service. Past performance is no guarantee of future results.