Harvard endowment posted 27% loss
Harvard University’s endowment lost 27.3% of its value in its most recent fiscal year, or nearly $11 billion, as tumultuous markets ate away at one of the school’s main sources of funding and forced a number of cutbacks.
In a report issued today, Harvard Management said the school’s endowment was down to $26 billion at June 30, compared to $37 billion the year earlier. As Harvard relies on the endowment for one-third of its annual budget, the losses forced it to slash expenses and lay off 275 people in June.
For the endowment, the losses were a stunning rebuke of investment strategies that in previous years had produced tremendous gains, and made the fund’s managers the envy of the university endowment world. Now though, Harvard Management’s new chief, Jane Mendillo, said she is adopting a number of changes, including hiring new investment managers and revamping how the fund looks for investment ideas.
Importantly one of those changes will include keeping hundreds of millions of in cash on hand to serve as a cushion and prevent, for example, the fund from having to unload assets at fire-sale prices to raise money, which only compounds losses. In her report Mendillo said that a factor in last year’s poor performance was “a lack of ready liquidity in the portfolio to meet our obligations, along with the needs of the university.”
via www.Boston.com
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