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Harvard Endowment Falls 27.3%, Most In 40 Years

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http://www.nytimes.com/2009/09/11/business...ml?ref=business

Harvard’s endowment tumbled 27.3 percent in its latest fiscal year, largely because of problems with its private equity and hedge fund portfolios, lopping off $10 billion and shrinking its portfolio to $26 billion.

The loss is the biggest percentage decline at Harvard in 40 years and has prompted a review of how it manages its money and allocates assets. Jane Mendillo, who took over the endowment on July 1, 2008, intends to manage more of the school’s assets directly instead of using outside money managers and to hire additional people to oversee the management by outsiders.

In her letter describing the dismal results for the year ended June 30, Ms. Mendillo said she was adding a chief operating officer as part of this initiative.

Harvard had signaled earlier this year that the fund might be down as much as 30 percent, and it seems to have benefited only slightly from the upswing in the stock markets this year.

Although other endowments at major universities suffered declines, many did better than Harvard, which has been known over the years for its investing prowess. The University of Pennsylvania, for example, was down 15.7 percent. A survey of foundations and endowments with assets of more than $1 billion by Wilshire Trust Universe Comparison Service found an average decline of 17.06 percent in fiscal 2009. A year earlier, Harvard’s endowment gained 8 percent, raising its total to $36.9 billion.

While Harvard aims to outperform, it also establishes a policy portfolio with a benchmark index for each asset class. Weighting its assets in each category and using those benchmarks, Harvard underperformed its policy portfolio by 2.1 percent.

Of six investment classes, four failed to meet their benchmarks. In a couple of cases the shortfall was sharp. Harvard’s private equity investments declined by 31.6 percent, compared with a benchmark loss of 23.9 percent. Absolute returns, more generally called hedge funds, fell 18.6 percent, compared with a 13.2 percent decline for the index. Harvard’s public equities did marginally better than the market, as did its real assets.

Harvard had a large share of assets in private equity, about 13 percent of the total as recently as February. In good times these private funds return money as deals are completed. In the recent financial upheaval, not only did the returns dry up but the funds required investors like Harvard to meet their commitments to add new money, creating a cash squeeze.

If only they had world class economists who had predicted the global crisis.

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http://www.nytimes.com/2009/09/11/business...ml?ref=business

If only they had world class economists who had predicted the global crisis.

Harvard should be closed down.

They are responsible for all this MBA ******** that caused the crash.

Hopefully the alumni will continue to fail to pay up and the place will fold.

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I´ve lost count of the number of rows I´ve had with puffed-up overrated Harvard alumni over the years. These guys have more to do with the bubble/collapse than anyone and I hope they are first against the wall when the revolution comes.

Edited by TwoWolves

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http://www.nytimes.com/2009/09/11/business...ml?ref=business

If only they had world class economists who had predicted the global crisis.

I think you will find in the real world, away from the clairvoyants on here, very few people can predict the future. As for the fund itself, I recall it has a very good track record. Again, in the real world, you cannot get a return above risk free without taking risk.

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I think you will find in the real world, away from the clairvoyants on here, very few people can predict the future.

So your saying it was correct to ignore the warning signs from 2005 when sub prime started to default and it was impossible to predict what was going to happen with higher interest rates?

I don't think that requires clairvoyance just common sense.

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So your saying it was correct to ignore the warning signs from 2005 when sub prime started to default and it was impossible to predict what was going to happen with higher interest rates?

I don't think that requires clairvoyance just common sense.

So you are saying it was obvious when the market was at 3500 a few months back and people on here were predicting Armageddon that the FTSE was going to go back to 5000?

I don't think that requires clairvoyance just common sense.

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So you are saying it was obvious when the market was at 3500 a few months back and people on here were predicting Armageddon that the FTSE was going to go back to 5000?

I don't think that requires clairvoyance just common sense.

Do stock market generally do well during a banking crisis? I have no idea just a question.

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If only they had world class economists who had predicted the global crisis.

It's the endowment-less recovery.

HA!!! now you know what it feels like ;)

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Do stock market generally do well during a banking crisis? I have no idea just a question.

Haven't looked, but on a related note, if you look at the stock market in 1975, when most people though stock market investing was over, it went on to almost triple in a year.

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Haven't looked, but on a related note, if you look at the stock market in 1975, when most people though stock market investing was over, it went on to almost triple in a year.

Who where most people? The general public or the traders? How long did it keep the gains for after it tripled?

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Who where most people? The general public or the traders? How long did it keep the gains for after it tripled?

"Who where most people? "

You will have to ask some of the old duffers on here what the outlook was

"How long did it keep the gains for after it tripled?"

Low of 66.74 on 29/11/74 and continued on upward trend until 1987 crash when it was over 1200 (FTSE All share)

Graph on here is for 1974-5

http://www.noelwatson.com/blog/PermaLink,g...cdcd1b8f5f.aspx

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