Harvard Endowment Hurt By PE, Real Estate Investments

Sep 11 2009 | 1:28pm ET

Not even the crimson elite are immune from market upheaval. Harvard University’s endowment, which is heavily invested in private equity, hedge funds and other alternative investments, dropped 27.3% during the fiscal year ending June 30, but despite the decline, the universtory’s long-term performance remains solid.

The 5-year annualized return was 6.2, and the 10-year annualized return was 8.9%, with the overall value of Harvard’s endowment now standing at $26 billion.

“During the 2009 fiscal year we saw extreme volatility and financial dysfunction impacting markets around the world as well as the Harvard portfolio,” Harvard Management Company President and CEO Jane Mendillo told the Harvard Gazette. 

“HMC actively managed the endowment through truly unprecedented conditions over the past year while maintaining the long-term focus on investment opportunities that has served Harvard so well historically.”

During the fiscal year, the endowment slashed commitments to private equity and real estate by $3 billion—to $8 billion from $11 billion. Yale President Richard Levin wrote a letter to faculty and staff explaining that the losses from these two asset classes would be offset by budget cuts, specifically staff layoffs and postponing campus expansion plans. 

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