The

Harvard University Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the Puritan clergyman John Harvard, it is the oldest institution of higher le ...

endowment (valued at $53.2 billion ) is the largest academic endowment in the world. Its value increased by over 10 billion dollars in fiscal year 2021, ending in the largest sum in its history. 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 Investment management is the professional asset management of various securities, including shareholdings, bonds, and other assets, such as real estate, to meet specified investment goals for the benefit of investors. Investors may be institut ...

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 A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

of the company. HMC is a

501(c)(3) A 501(c)(3) organization is a United States corporation, 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 the 29 types of 50 ...

non-profit entity and is so exempt from federal income taxation.

Past Management

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 Highfields Capital Management LP is a hedge fund founded in 1998 which had assets of $12.1 billion in 2018. The annualized net returns during the firm's first 20 years were more than 10%. Business Richard Grubman and Jonathon Jacobson met at an i ...

LP and Regiment Capital Advisors LLC—which at that time between them managed $43 billion in assets. The university hired

Mohamed El-Erian Mohamed Aly El-Erian ( ar, محمد العريان, Muḥammad al-ʿAryān; 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 corpor ...

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

PIMCO PIMCO (Pacific Investment Management Company, LLC) is an American investment management firm focusing on active fixed income management worldwide. PIMCO manages investments in many asset classes such as fixed income, equities, commodities, asset ...

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 Wellesley College is a private women's liberal arts college in Wellesley, Massachusetts, United States. Founded in 1870 by Henry and Pauline Durant as a female seminary, it is a member of the original Seven Sisters Colleges, an unofficial g ...

’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 research university in New Haven, Connecticut. Established in 1701 as the Collegiate School, it is the third-oldest institution of higher education in the United States and among the most prestigious in the wo ...

followed by an MBA from

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

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

financial crisis of 2007–2010 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fina ...

, 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 that ''derives'' its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the "underlying". Derivatives can be u ...

and

leveraged In finance, leverage (or gearing in the United Kingdom and Australia) is any technique involving borrowing funds to buy things, hoping that future profits will be many times more than the cost of borrowing. This technique is named after a lever ...

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 pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...

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 inv ...

Baupost Group The Baupost Group is a hedge fund founded in 1982 by Harvard adjunct professor 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 tod ...

. 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 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 prin ...

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 * Chemical bond, the attraction of atoms, ions or molecules to form chemica ...

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'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...

'' 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.

Current Management

On September 30, 2016, N.P. 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 trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as shor ...

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

Harken Energy

In 2002, Harvard Management Company was linked to

George W. Bush George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...

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

private equity In the field of finance, the term private equity (PE) refers to investment funds, usually limited partnerships (LP), which buy and restructure financially weak companies that produce goods and provide services. A private-equity fund is both a ty ...

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.

Investments in Romania

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 Dutch multinational conglomerate based in the Netherlands that designs and sells , kitchen appliances, decoration, home accessories, and various other goods and home services. Started in 1943 by Ingvar Kamprad, IKEA has been t ...

. 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. 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.