Yale University, whose endowment is the top performer in the U.S., is cutting its target allocations in hedge funds to allow for bigger stakes in private equity and real estate, the asset classes that hurt the fund last year.

Yale boosted the fund's private-equity target to 26% from 21%, and its real assets allocation, which includes real estate and commodities, to 37% from 29%, at its June 2009 investment committee meeting, according to a report released last week.

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