David Swensen, Yale University’s chief investment officer, has clarified the university’s endowment venture capital portfolio earned returns that were reported at 92.7% earlier this month, reports the Wall Street Journal.
The figure led to some criticism from news sites that were dubious of the claims.
Swensen clarified the number as the internal rate of return over 20 years, ending on June 30 2015. This caused the figure to be substantially increased by its performance in the dot-com boom.
He went on to say that the venture capital portfolio’s 20-year time-weighted return is 32.3%.
The diverging figures are caused by the difference between dollar-weighted internal rate of return and time-weighted compounded returns.
Swensen said: “Obviously, we are not able to reinvest our venture capital cash flows at a 92.7% rate of return.”
