Episode Overview

Title: PE Funds, the S&P, and the Ivy Leagues
Host: Scott Becker
Date: February 16, 2026
Theme:
Scott Becker examines the recent performance and strategic shifts in private equity (PE) investments, particularly focusing on Ivy League endowments, their historic and current asset allocation, and how this compares with S&P 500 index performance. He provides historical context, discusses notable shifts, and draws lessons for both institutional and individual investors.

Key Discussion Points & Insights

Ivy League Endowments: Pioneers in Private Equity

• Historic Lead in Alternative Investments
  • The largest Ivy League endowments—especially Yale's, under David Swensen—were “some of the biggest investors in private equity funds” (00:13).
  • For two decades, this investment strategy delivered outsized returns and became a benchmark for endowment management.
• David Swensen’s Influence
  • Swensen was “one of the first big investors in the Ivy League to really introduce private equity funds and alternative investments into their investment portfolios and thereby ultimately outperformed the rest of the Ivies” (00:37).
  • "[Swensen] wrote a great book on the subject which is also great reading" (01:02).
• Statistical Highlights
  • “Three of the biggest endowments hold about 35 to 40% of their holdings in private equity funds and alternative assets” (00:19).

Recent Performance: Private Equity vs. S&P 500

• Dramatic Underperformance by PE
  • “The S&P index, the five hundreds up by about 19.7% a year per annum. The private equity fund universe is up by 7.4% a year per annum” (01:13).
  • The PE returns are not only lower, but “that 7.4 is very illiquid. It’s not really turned into distributions of cash” (01:23).
  • Raises skepticism about PE reported performance: “all kinds of questions as to whether that's a real number or not” (01:29).
• Market Dynamics
  • PE funds face a tough market for exits: “You’re also sitting in the private Equity World on 30,000 plus exits that people want to happen and have not been able to happen because… multiples have been softening versus going up, interest rates have been pretty high versus low” (01:37).
  • Result: “You’ve been in tough environment for private equity funds and investing” (01:49).

Strategic Reassessment by Ivy League Endowments

• Rethinking Asset Allocation
  • Due to recent underperformance, “this is leading Ivy League universities… to now question what allocation they should have in private equity funds” (01:53).
  • Becker notes: “What seemed great for the past is not so great going forward” (02:08).

Broader Lessons for Investors

• Explosion of Private Equity Fund Options
  • Echoing a warning: “There’s been an absolute explosion in private equity funds. So they are not equal across the board. Some are great, some are horrible” (02:13).
• Index Funds: Fee and Performance Comparison
  • Emphasizes: “Index funds, the S&P, even when private equity is outperforming, only get outperformed by a certain amount and you get much lower fees when you invest in index funds in the S&P” (02:20).
• Personal Experience
  • Becker reflects: “For people like me who didn’t come into real money until the last five to ten years... We have found this to be a rude awakening in terms of timing, but a great lesson in investing” (02:01).

Notable Case: Blackstone’s Performance

• Highlighting Major Players’ Struggles
  • “Blackstone, the largest of the private equity fund managers, is down 20% over the last year and continues to struggle as again they can’t seem to find exits” (02:31).

Notable Quotes & Memorable Moments

• On Yale’s Endowment Strategy:
  “David Swensen… was one of the first big investors in the Ivy League to really introduce private equity funds... and thereby ultimately outperformed the rest of the Ivies and most endowment funds, but by a great deal became sort of a case study in great management.” (00:37)
• On Recent Performance Disparities:
  “When you look at the past three years, the S&P index... up by about 19.7% a year per annum. The private equity fund universe is up by 7.4% a year per annum.” (01:13)
• On Illiquidity and Skepticism:
  “That 7.4 is very illiquid. It’s not really turned into distributions of cash. And of course there’s all kinds of questions as to whether that’s a real number or not.” (01:23)
• On a Changed Investment Landscape:
  “We have found this to be a rude awakening in terms of timing, but a great lesson in investing that what seemed great for the past is not so great going forward.” (02:01)
• On Blackstone’s Troubles:
  “Blackstone, the largest of the private equity fund managers, is down 20% over the last year and continues to struggle as again they can’t seem to find exits.” (02:31)

Timestamps for Important Segments

• 00:13 — Introduction: Ivy League endowments & private equity investment strategies
• 00:37 — David Swensen’s pioneering role & impact
• 01:13 — Recent 3-year comparative returns: S&P 500 vs. private equity
• 01:37 — Market dynamics: Illiquidity, exit difficulties, and macroeconomic challenges
• 01:53 — Ivy Leagues rethinking their PE allocations
• 02:01 — Lessons for newer investors, including Becker’s own perspective
• 02:13 — PE fund proliferation & quality disparity
• 02:20 — Investment case for index funds
• 02:31 — Blackstone’s recent performance decline

Summary

Scott Becker’s episode delivers a tightly focused analysis on the changing fortunes of private equity as an asset class, highlighting how Ivy League endowments' once-pioneering strategies are facing a challenging new market landscape. He uses telling statistics, references influential management (notably David Swensen), and contrasts the illiquidity and recent underperformance of PE against the meteoric returns of the S&P 500. Up-to-the-minute insights—like Blackstone’s struggles—bring urgency to his message: strategies that worked spectacularly for decades do not guarantee future outperformance, and index funds offer a compelling case for both institutional and personal investors in the current climate.