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Harvard Endowment Is Much Less Bad

The overhauled Ivy League fund handily beat its initial peer group average this fiscal year, exclusive data show.

The world’s largest university endowment might be finally turning around. 

Harvard’s $40.9 billion portfolio returned 6.5 percent for the fiscal year ending June 30, investment CEO Nirmal (Narv) Narvekar said in note addressed to “members of the Harvard community” on Friday.

This result puts the Harvard Management Company (HMC) more than a full percentage point ahead of a preliminary peer group median for the year, according to a private return database of about 100 endowments and foundations. 

The fund narrowly topped last’s year average $1 billion-plus endowment return, NACUBO-TIAA figures showed, adding 10 percent versus peers’ 9.75 percent average. But over longer time horizons, HMC has underperformed most large university funds. Among Ivy League schools, Harvard was the perennial caboose. 

Harvard lured Narvekar away from Columbia University’s high-performing endowment in late 2016, and he set about culling its vast internal investment team and reshaping HMC in the image of its elite peers. 

[II Deep Dive: Harvard Endowment’s Rebirth]

“They’ve had a lot of turnover and taken a lot of heat for not keeping up with their Ivy League brethren,” said Nolan Bean, managing principal of investment consulting firm Fund Evaluation Group, at the time of the hiring. “You don’t want a lot of turnover in that top job: Harvard is the ultimate long-term pool of capital. And it’s disruptive.”

Nearly three years into his tenure, Narvekar has lasted almost twice as long as his predecessor. Stephen Blyth resigned in July 2016 for undisclosed “personal reasons” after two months of medical leave, and 16 months on at the helm.

HMC’s promising showing in 2019 suggests that Narvekar’s leadership and radical organization overhaul may be paying off.

“We are now halfway through our five-year transition of both the structure of HMC and the university’s investment portfolio,” the CEO wrote in his note Friday. “I am encouraged by the progress our team has made to date, but we are mindful that there is much left to accomplish in the years ahead to resolve legacy issues and position the endowment for long-term success.”

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