Harvard Management Company has seen a busy year. Under the leadership of N.P. Narvekar, the endowment manager whose internal structure was once critiqued as “lazy, fat and stupid” has now undergone great change in the midst of an often uncertain financial environment. HMC has laid off many employees while seeking to ultimately cut its staff in half, delegated work to various investment teams, and eliminated many internally-managed investments. Narvekar has not hesitated to make the required large-scale changes to improve HMC’s success. We commend him for moving forward with his ambitious agenda to decentralize the endowment, which he first set out to do in January.
It appears that Bain Capital is in talks to manage over half—about $5 billion worth—of the endowment’s current real estate portfolio. This is a significant change, especially as real estate saw the highest returns of any asset class in the past fiscal year. In addition, the transition to Bain will also involve roughly 20 hires from HMC, who will have the institutional expertise and familiarity that managing the endowment necessitates. We are glad there will be some continuity of institutional expertise in the portfolio’s management.
We are glad to see this further development within HMC and are interested to see how Harvard’s real estate holdings will fare in private hands. While Bain has not officially committed to this deal, we are cautiously optimistic that this decision will be good for the endowment. Regardless of the outcome, the performance of this change will serve as a bellwether for Narvekar’s agenda, providing a benchmark by which to rate his handling of the endowment. We, along with many others, will thus be closely watching Bain’s performance over the next few years.
We commend Narvekar for all he has done with Harvard’s endowment. As we have previously opined, he has quickly shown himself to be a dedicated and driven CEO. It is important to remember that this is only the first year of his tenure. While the endowment’s returns were low compared to those of other Ivy League schools, we are hopeful that in future years, Harvard’s finances will prosper. This outsourcing to Bain is an example of the long-term thinking that such a financial investment requires. For now, all we can do is wait.
This staff editorial solely represents the majority view of The Crimson Editorial Board. It is the product of discussions at regular Editorial Board meetings. In order to ensure the impartiality of our journalism, Crimson editors who choose to opine and vote at these meetings are not involved in the reporting of articles on similar topics.
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Harvard Moves to Outsource Real Estate Management to Bain Capital