University Endowment Tumbles by $130 Million

Two years after riding the 1982 bull market for $200 million in gams, Harvard's endowment, hurt by weak stock and bond markers, rank $1 30 million to $2 324 billion over the seat ending June 30, University officials said this week.

Although the endowment has not fallen since 1973, financial officers said that Harvard actually performed slightly better than the sagging market. "The number, on the surface, doesn't look that good, but it you look at what happened to he marked as a whole. It's pretty good," said Treasurer Roderick M MacDougall '51.

The University's ten faculties depend on income from the endowment for anywhere from 11 to 43 percent of their yearly budgets. Some 26 percent of this year's Faculty of Arts and Sciences $170 million budget is provided by endowment income.


Walter M Cabot '55, president Harvard Management Company, the University's 90 member investment staff, said that while Harvard lost 3.6 percent, "to put that in perspective, O guess it would be significantly better than the mean of average."

Cabot attributed the loss to the last that over the fiscal near, the average value of the standard and Poors index of 500 stocks tell 4.8 percent and bounds dropped roughly 6 percent in response, the University moved heavily out of equities and bonds into "cash" investments-like 90 day Treasury bills but not enough to stave off losses.


Bleak Results Elsewhere

Investment managers at other universities also reported bleak results for 1983-84. The University of Texas's endowment, second biggest in the country after Harvard's dropped $147 million to $2.003 billion, said Financial Adviser L R. Whiteside.

"If you were in stocks, you went down even further," said Stanford Treasure Ronald Adams. Stanford's $1 billion endowment lost about 1 percent over the year, and Adams said the Palo Alto, Calif, university made money only on real estate, venture capital and foreign equality investments.

Others Ivy League schools refused to release endowment information yet. Harvard, as do the other schools, traditionally holds off on making endowment performance information public until the release of its annual financial report in early December. The fiscal 1984 figures were obtained from a prospectus for a sale yesterday of $17 million worth of bond anticipation notes.

The prospectus also showed that the University as a whole ran a $300,000 surplus on a budget of $586.9 million. The endowment was shored up by $62.4 million worth of gifts raised generally by the $350 million Harvard Campaign, which remains about $20 million short of its goal with less than two months to go. Total University investment, counting special holdings not included in the endowment, rose to $2.66 billion.

Investment Strategy

Cabot said the University held down its losses by cutting down its stock holdings and keeping more money in riskless cash holdings.

On June 30, 1983, Harvard's holdings were split 66 per cent in stocks, 24 percent in bonds and only 3 percent in cash, which includes money market deposits and notes with a maturity of less than a year. Over the year, Harvard drastically decreased its stock portfolio, dumping a $300 million slug of equities in December and rearranging its equality holdings to includes more medical and small technology companies, the only sectors growing in sleepy market.

By June 1984, stocks represented only 46 percent of Harvard's holdings, while cash made up 26 percent and bonds held steady. Since then, bonds have been increased to 35 percent, stocks to 55, and "cash is minimal," Cabot said.

The management company's analysts foresee a 1985 economic slowdown, bringing lower interest rates and an improved bond market. Cabot said. According, he said Harvard will:

* increase bond holdings somewhat more than equities, and keep more short and Intermediate term bonds, with a maturity of two to eight years, instead of long-term bonds.

* increase holdings in food companies, insurance, telephone and utilities, all of which would benefit from lower interest rates.

* get out of chemical, machinery and technology stocks