The

Harvard University Harvard University is a Private university, private Ivy League research university in Cambridge, Massachusetts, United States. Founded in 1636 and named for its first benefactor, the History of the Puritans in North America, Puritan clergyma ...

endowment, valued at $53.2 billion , is the largest academic endowment in the world. Its value increased in fiscal year 2024, ending the year with its largest sum in history. Along with Harvard's pension assets, working capital, and non-cash gifts, the endowment is managed by Harvard Management Company, Inc. (HMC), a Harvard-owned

investment management Investment management (sometimes referred to more generally as financial asset management) is the professional asset management of various Security (finance), securities, including shareholdings, Bond (finance), bonds, and other assets, such as r ...

company.

Harvard Management Company

HMC employs financial professionals to manage the approximately 14,000 funds that constitute the endowment. HMC is a

501(c)(3) A 501(c)(3) organization is a United States corporation, Trust (business), trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of ...

non-profit entity exempt from federal income taxation and led by a management team of N.P. "Narv" Narvekar (chief executive officer), Rick Slocum (chief investment officer), and Sanjeev Daga (chief operating officer).

Management history

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 Charlesbank Capital Partners is an American private equity investment firm based in Boston and New York City that specializes in the middle market. The firm has $23B of total assets across three investment strategies: flagship middle market p ...

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 Mohamed Abdullah El-Erian (; born August 19, 1958) is an Egyptian-American economist and businessman. He is President of Queens' College, Cambridge, and chief economic adviser at Allianz, the corporate parent of PIMCO where he was CEO and co- ch ...

to succeed Meyer as HMC's next president and CEO. He came from the bond trading company

PIMCO Pacific Investment Management Company LLC (PIMCO) is an American investment management firm. While it has a specific focus on active fixed income management worldwide, it manages investments in many asset classes, including fixed income, share ca ...

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 Jane L. Mendillo is an American endowment fund manager. She was the president and chief executive officer of the Harvard Management Company, charged with managing Harvard University's endowment. She led the investment team from 2008 to 2014, whe ...

was named the new head of HMC, effective July 1, 2008. She had been

Wellesley College Wellesley College is a Private university, private Women's colleges in the United States, historically women's Liberal arts colleges in the United States, liberal arts college in Wellesley, Massachusetts, United States. Founded in 1870 by Henr ...

’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 Yale University is a Private university, private Ivy League research university in New Haven, Connecticut, United States. Founded in 1701, Yale is the List of Colonial Colleges, third-oldest institution of higher education in the United Stat ...

followed by an MBA from

Yale School of Management The Yale School of Management (also known as Yale SOM) is the graduate school, graduate business school of Yale University, a Private university, private research university in New Haven, Connecticut. The school awards the Master of Business Admi ...

, Mendillo first joined HMC as an equities analyst in 1987. Her tenure was largely shaped by the

Great Recession The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009.

, with a cash squeeze in University operation and endowment performance, a shrinkage of endowment asset value, and errant interest rate,

financial derivatives In finance, a derivative is a contract between a buyer and a seller. The derivative can take various forms, depending on the transaction, but every derivative has the following four elements: # an item (the "underlier") that can or must be bou ...

and

leveraged In finance, leverage, also known as gearing, is any technique involving borrowing funds to buy an investment. Financial leverage is named after a lever in physics, which amplifies a small input force into a greater output force. Financial leverag ...

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 fund A hedge fund is a Pooling (resource management), pooled investment fund that holds Market liquidity, liquid assets and that makes use of complex trader (finance), trading and risk management techniques to aim to improve investment performance and ...

s run by Meyer's Convexity Capital and

Seth Klarman Seth Andrew Klarman (born May 21, 1957) is an American billionaire investor, hedge fund manager, and author. He is a proponent of value investing. He is the chief executive and portfolio manager of the Baupost Group, a Boston-based private in ...

Baupost Group The Baupost Group is a hedge fund founded in 1982 by William Poorvu and partners Howard Stevenson, Jordan Baruch and Isaac Auerbach. Seth Klarman, who was asked by Poorvu to help run the fund, remains at its head today. Baupost Group's investm ...

Stephen Blyth Stephen James Blyth is a British mathematician and academic. Since October 2022, he has been Principal of Lady Margaret Hall, Oxford. He had been Professor of the Practice of Statistics at Harvard University since 2012, and was also chief execut ...

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 Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the pr ...

in an effort to revamp the company's

bond Bond or bonds may refer to: Common meanings * Bond (finance), a type of debt security * Bail bond, a commercial third-party guarantor of surety bonds in the United States * Fidelity bond, a type of insurance policy for employers * Chemical bond, t ...

division in 2006. Mr. Seidner was previously the director of active core strategies at Standish Mellon Asset Management. ''

The Wall Street Journal ''The Wall Street Journal'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...

'' 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. On September 30, 2016, N.P. "Narv" Narvekar was appointed as CEO. In January 2017, 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 A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to aim to improve investment performance and insulate returns from market risk. Among these portfolio techniq ...

by the end of the 2017 fiscal year. In 2019, Narvekar was paid $9.3 million compensation.

Controversies

In 2002, Harvard Management Company was linked to

George W. Bush George Walker Bush (born July 6, 1946) is an American politician and businessman who was the 43rd president of the United States from 2001 to 2009. A member of the Bush family and the Republican Party (United States), Republican Party, he i ...

's Harken Energy scandal. Specifically, Michael R. Eisenson, who would later found

private equity Private equity (PE) is stock in a private company that does not offer stock to the general public; instead it is offered to specialized investment funds and limited partnerships that take an active role in the management and structuring of the co ...

firm

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. From 2004 to 2015 Harvard University acquired 33,600 hectares (83,000 acres) of Romanian forest land. In 2015 they abruptly sold their entire holding to a subsidiary of

Ikea IKEA ( , ) is a Multinational corporation, multinational conglomerate (company), conglomerate founded in Sweden that designs and sells , household goods, and various related services. IKEA is owned and operated by a series of not-for-profit an ...

. These holdings have since faced significant legal challenge as many were acquired corruptly during Romania's post-Communist restitution process.

Ending investments in fossil fuels

In September 2021, after years of pressure from student and outside groups, Harvard announced that it will stop investments in

fossil fuels A fossil fuel is a flammable carbon compound- or hydrocarbon-containing material formed naturally in the Earth's crust from the buried remains of prehistoric organisms (animals, plants or microplanktons), a process that occurs within geologica ...

. The university's public announcement cited "the need to decarbonize the economy and our responsibility as fiduciaries" in explaining its decision. Climate activists on campus had waged a multi-year campaign for full divestment, including bringing lawsuits, storming the field of the 2019 Harvard-Yale football game, organizing on-campus protests, and other strategies.

References

External links

Articles

"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.