Big Take
The Investment Strategy Behind Harvard’s Record Endowment — and How It Fell Apart
Sep 30, 2024
Janet Lorin, a Bloomberg journalist specializing in financial reporting, discusses the intriguing saga of Harvard University's endowment fund, the largest globally. The conversation reveals how innovative investment strategies helped Harvard dominate, yet recent leadership changes have hindered performance compared to rivals like Yale and Brown. Lorin explores the shift in Harvard's investment approach, rising alumni dissatisfaction, and the competitive landscape that poses challenges to maintaining endowment supremacy.
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Quick takeaways
- Harvard University's endowment grew significantly in the 1990s due to a shift towards diversified investments like private equity and hedge funds.
- Recent leadership changes and strategy shifts have led to declining returns for Harvard's endowment, raising concerns about its competitive edge against rivals.
Deep dives
The Evolution of Harvard's Endowment Strategy
Harvard's endowment, currently valued at $50.7 billion, has undergone significant changes since its inception. Initially, the endowment relied on traditional investments in stocks and bonds, similar to many universities. However, under Jack Meyer's leadership in the 1990s, Harvard adopted a more diversified strategy that incorporated illiquid assets such as private equity and hedge funds. This shift contributed to a remarkable growth of the endowment from $4.8 billion to $25.9 billion, allowing for substantial funding for university operations, scholarships, and fellowships.
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