TICKER - Steady as she goes Wellesley’s Jane Mendillo jumps ship for harvard

How does a university endowment survive a brutal credit crunch? Jane Mendillo thinks it’s by maintaining a well-diversified portfolio that’s rich in alternative assets. That’s why the soft-spoken chief investment officer of Wellesley College’s $1.67 billion endowment doesn’t plan any big changes when she starts her new job on July 1 as CEO of Harvard Management Co., which runs the biggest university endowment in the U.S.

Like the Wellesley fund she has managed since February 2002, the Harvard portfolio holds a diverse mix of U.S. and international equities and bonds and has a large allocation of alternative assets, including private equity. It’s well positioned to weather the current market turmoil, Mendillo believes. “I don’t think there are any specific major things I am going to need to do right away in terms of a reallocation of assets,” says the mother of two teenage children.

Harvard’s $34.9 billion in assets dwarfs any fund Mendillo has ever managed, but she is intimately familiar with the endowment. The 49-year-old Yale School of Management graduate held several different positions while working at HMC from 1987 to early 2002; the last five of those years she was vice president in charge of external managers, who then ran one third of the endowment’s assets. Since then, that portion has risen to 70 percent, a level she says she won’t change.

At deep-pocketed Harvard, Mendillo could become a magnet for cash-starved companies in search of private equity investors — especially in today’s tight market. “Harvard has lots of dollars to invest, so a lot people are looking at it as an opportunity to provide liquidity in ways that might not otherwise exist,” says Collette Chilton, CIO of Williams College’s $1.89 billion endowment. Mendillo declines to comment except to say that she’s looking forward to having the wider array of options that comes with Harvard’s sheer size. “It’s a great platform from which to look for significant investment opportunities,” she notes. “The kind of turbulent markets we are having now can lead to significant moneymaking opportunities.”

Mendillo was named last month to the post vacated by Mohamed El-Erian last fall. She will be the first woman to run Harvard’s endowment and will serve under the university’s first female president, Drew Gilpin Faust. But Mendillo doesn’t consider herself an affirmative-action case. “Gender has not been a major issue for me in my career,” she says. “Superior returns are really the thing that people are looking for.”