Harvard's Funds Change Hands

The Corporation set the stage for the end of State Street Research and Management's 36-year reign over Harvard's endowment this week when Walter M. Cabot '55 was named president of the new Haryard Management Co.

Cabot, senior vice president of Wellington Management was officially appointed Wednesday. The announcement came only hours after George Putnam '49, treasurer of the University, was notified that the establishment of a separate management company, wholly owned by the Corporation, would not endanger the tax-exempt status of Harvard's portfolio.

The financially conservative State Street company, including former Harvard treasurers George F. Bennett '33 and Paul C. Cabot '21 and a number of Harvard and Business School graduates, will officially bow out of the University financial picture when Cabot takes over Harvard's new firm full-time in April.

Since 1948 State Street has managed Harvard's endowment for the nominal fee of $100,000 annually.

So last year when Bennett announced his retirement, and the Corporation decided it was time for a change in management companies, Putnam and President Bok began to look for ways of cutting the cost of outside management. The Harvard Management Co. will no doubt be cheaper in the long run than finding outside firms for the whole endowment.

But Bok and Putnam are also concerned with efficient management and investment policy based on sound financial dealings, and the Corporation therefore will have outside companies handle the $4-million segment of the portfolio that Cabot will not.

Putnam said this week that three to five firms would be chosen to handle this smaller chunk of the portfolio. This will provide Putnam and the Corporation with a convenient yardstick with which to measure the performance of Cabot and the Harvard Management Co.

It is not yet known what effect the switch to its own management company will have on Harvard's investment policy--but it is safe to say that it could not become more conservative than Harvard's policy under Bennett and.State Street.