NicholasA. Vardy, CFA

Nicholas A. Vardy is Chief Investment Officer at Global Guru Capital. a fee-only, SEC-registered investment-advisory firm where he manages money for high-net-worth clients. Vardy is also the editor of three investing and trading services at NicholasVardy.com. He appears regularly on the Fox Business Network and CNBC Asia, and is a highly-rated speaker at investment conferences around the globe.

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It’s college rankings seasons again, as the nation’s college students (and parents) jostle for this year’s bragging rights.

But more relevant for investors are the investment returns recently announced by the top university endowments for the fiscal year ended June 30.

The Harvard endowment rose 11.3% in the fiscal year ending June, trailing rival Yale’s 12.5% return.

Even in the face of the financial meltdown of 2008, over time, the returns on the top university endowments have continued to trounce the returns of the broader U.S. stock market.

Over the past 10 years, the Yale endowment’s average annual return stands at roughly 11%. That compares with 7.1% for the S&P 500.

That’s a bigger difference than it looks at first.

According to my back-of-the-envelope calculations, Yale earned an extra $9.4 billion on its 2003 endowment of $11 billion just over the next 10 years compared with what it would have earned by simply investing in an S&P 500 index SPX, -0.61%  fund.

Swensen’s secret

Top university endowments owe their success mostly to the efforts of a single man, David Swensen, the long time head of Yale’s endowment.

After taking over the endowment in the mid-1980s, Swensen began to invest in then-obscure asset classes like private equity and venture capital, real estate, hedge funds, forests and farmland.

It was hard to argue with Yale’s unconventional approach. After all, Yale’s endowment boasted 15.6% average annual returns through 2007 — and no down years — going back to 1987.

Of course, imitation is the sincerest form of flattery. And within a few years, Harvard’s endowment shifted from a traditional 65%/35% allocation between stocks and bonds to a much more diversified portfolio, that looked, well. a lot like Yale’s.

Why you can invest like Harvard

Swensen has argued that you have no chance of matching to Yale’s market-beating returns. After all, you can’t invest in venture capital and timberland. Besides, Yale invests with the top investment managers in the world.