Harvard University endowment
|N.P. “Narv” Narvekar |
|AUM||US$ 37.1 billion (FY 2017)|
Harvard University's endowment (valued at $37.1 billion as of 2017[update]) is the largest academic endowment in the world. Along with Harvard's pension assets, working capital, and non-cash gifts, it is managed by Harvard Management Company, Inc. (HMC), a Harvard-owned investment management company.
Harvard Management Company
HMC employs financial professionals to manage the approximately 12,000 funds that constitute the endowment. The company directly manages about one third of the total endowment portfolio while working closely with the external companies that manage the rest. HMC is headed by a professional, who holds the titles of president and chief executive officer of the company.
Jack Meyer managed HMC from 1990 to September 30, 2005, beginning with an endowment worth $4.8 billion and ending with a value of $25.9 billion (including new contributions). During the last decade of his tenure, the endowment earned an annualized return of 15.9%. In part after compensation disagreements, a number of HMC managers including Meyer himself left to form their own investment management firms. Bloomberg in 2011 reviewed a group of the resultant firms—Adage Capital Management LP, Charlesbank Capital Partners LLC, Convexity Capital Management LP (Meyer's), Highfields Capital Management LP and Regiment Capital Advisors LLC—which at that time between them managed $43 billion in assets.
The university hired Mohamed El-Erian to succeed Meyer as HMC's next president and CEO. He came from the bond trading company PIMCO and pledged to "rebuild and reinvent" the company. He announced his leaving September 12, 2007, to return to PIMCO after guiding the endowment to a one-year return of 23%.
Jane Mendillo was named the new head of HMC, effective July 1, 2008. She had been Wellesley College’s chief investment officer since 2002. Prior to that, she served as vice president for external management at HMC. A 1984 graduate of Yale University followed by an MBA from Yale School of Management, Mendillo first joined HMC as an equities analyst in 1987. Her tenure was largely shaped by the financial crisis of 2007–2010, with a cash squeeze in University operation and endowment performance, a shrinkage of endowment asset value, and errant interest rate, financial derivatives and leveraged positions, according to a Feb. 2009 news report. Staff of HMC was trimmed 25%, or by about 50 people, in line with shrinkage of about $8 billion (about 22%). A source for the report said that some of the positions in the endowment which had to be liquidated were in hedge funds run by Meyer's Convexity Capital and Seth Klarman's Baupost Group.
Stephen Blyth became the CEO of HMC on January 1, 2015. Blyth joined the firm in 2006, and previously held roles as Head of Internal Management and Head of Public Markets, responsible for investments in public equity, credit and fixed income markets. An alumnus of Cambridge University and Harvard University, Blyth has also served as a Professor of the Practice of Statistics at Harvard University.
Marc Seidner joined HMC as vice president for domestic fixed income in an effort to revamp the company's bond division in 2006. Mr. Seidner was previously the director of active core strategies at Standish Mellon Asset Management. The Wall Street Journal reported on June 23, 2009, that Seidner was departing from the organization. On August 14, 2009 PIMCO announced that it had hired Seidner as an executive vice president and portfolio manager to manage a range of fixed-income portfolios.
In January 2017, CEO Narvekar announced the company would be laying off about half of the 230-employee staff by outsourcing some positions and closing all its internally managed hedge funds by the end of the 2017 fiscal year.
In 2002, Harvard Management Company was linked to George W. Bush's so-called Harken Energy scandal. Specifically, Michael R. Eisenson, who would later found private equity firm Charlesbank Capital Partners was the Harvard representative on the Harken Energy board when Harvard made a $30 million investment into the ill-fated oil company venture. At the time, employees were accused of improperly investing their own money into Harken but Harvard deemed those investments appropriate.
- List of colleges and universities in the United States by endowment
- List of wealthiest charitable foundations
- "Harvard at a Glance". Harvard University. Retrieved July 5, 2017.
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- Harvard Management Company (2015). "About HMC". Retrieved July 14, 2015.
- Harvard Management Company (2015). "Hybrid Model". Retrieved July 14, 2015.
- BusinessWeek (2005). "Harvard Loses an Investing Star". Retrieved March 24, 2008.
- Wee, Gillian, "Harvard's Crimson Cubs With $43 Billion Dwarf Their Former Endowment Home", Bloomberg, March 2, 2011. Retrieved 2012-11-07.
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- Steinhard, Jenifer L., "Harvard Investors Call Harken Deal Clean", The Harvard Crimson, November 21, 2002
- "Harvard and Yale Report Losses in Endowments", The New York Times, September 11, 2009.
- Epstein, Edward Jay, "How Much Has Harvard Really Lost?", Huffington Post, December 21, 2008.
- "Harvard's Fund Returns 23%, Boosting Size to $34.9 Billion", The Wall Street Journal.
- The Harvard Crimson
- Mossavar-Rahmani, Cyrus M., "Endowment Chief Speaks to Students", May 4, 2006. Re: Mohamed A. El-Erian.
- Ciarelli, Nicholas M., "HMC Salaries Fall From Highs", January 3, 2006.
- Ciarelli, Nicholas M., and Alexander H. Greeley, "Top Bond Manager to Lead Endowment", October 14, 2005. Re: Mohamed A. El-Erian.
- "Endowment Reaches $25.9 Billion", no working link or date.
- Zhu, Peter F., "HMC Analyst Questions Dismissal", March 31, 2009. Re: analyst Iris Mack's 2002 dismissal and settlement.
- The Harvard Crimson