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Harvard Endowment Still Sucks

But having cut out both the dead and living wood, it hopes to suck less going forward.
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Don't let the gate hit you on the way out. By John Phelan (Own work) [CC BY 3.0], via Wikimedia Commons

By John Phelan (Own work) [CC BY 3.0], via Wikimedia Commons

A year ago, the world’s largest university endowment decided it was tired of also being the world’s shittiest. After decades of stubbornly sticking by a model in the way only a school with $37 billion in the bank can—mostly, it seems, to avoid admitting that its ancient and hated rival was right—Harvard finally gave in and sacked those internal money managers who weren’t good enough to get a better-paying job elsewhere, and started hiring those better-paid money managers, also known as hedge fund managers (You know, like this one. Wait, bad example), the way Yale’s been doing it forever.

Unfortunately for Harvard, Narv Narvekar isn’t a miracle worker. After all, he was running Columbia’s endowment before coming to Harvard, not Yale’s. And when Narvekar arrived in Boston, he found himself buried under money-losing timberland and other natural resource investments. Clearly, cleaning up his predecessors’ mess is going to take some time.

“Performance is disappointing and not where it needs to be,” Narvekar said in his letter to the Harvard community Tuesday. “It is an unfortunate truth that the issues that have impacted HMC performance in the past will continue to negatively impact returns in the near term and will require time to overcome.”

Now, an 8.1% return seems like a miracle compared to last fiscal year’s 2% drop, but it’s a little hard to swallow when that trade school down Massachusetts Avenue is rubbing a 14.3% return in your face. Still, props to Narv for facing up to the problem and just ripping the Band-Aid off.

That probably means that Narvekar decided the endowment should write off its losses in natural resources now, while it had strong returns in other sectors, said Charles Skorina, an executive recruiter in San Francisco who follows endowments and pensions.

“Had Harvard not decided to take the loss this year, their returns would have been more in line with the other Ivy League schools,” Skorina said.

Of course, who really knows what returns would have been: Since Narv’s only worried about the bottom line, he’s decided that’s all you should worry about, too.

Narvekar further shaded the already murky world of how Harvard invests its endowment funds. The school ended a longstanding tradition of releasing detailed reports on how various groups of investments performed, whether the investments met their benchmarks, and how the overall fund performed historically…. Harvard endowment officials said that since the fund is less focused on the performance of individual investment groups, it would no longer offer a more detailed report.

Harvard’s endowment posts 8.1 percent return, lagging behind peers [Boston Globe]


Don't let the gate hit you on the way out. By John Phelan (Own work) [CC BY 3.0], via Wikimedia Commons

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