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Harvard Endowment Quadruples Average Returns

By May Habib, Crimson Staff Writer

Harvard’s endowment growth of 12.5 percent was four times larger than the average return on investments for most universities last year.

The average endowment growth for an institution of higher learning was 3 percent for the year that ended June 30, 2003 (FY 2003), according to an annual study of 723 American colleges released Tuesday by the National Association of College and University Business Officers (NACUBO).

And when accounting for the 2.2 percent inflation rate and the fact that, on average, universities spend about 5.4 percent of their endowments per year, the average university endowment actually shrank in FY 2003.

After declining for two consecutive years, Harvard’s endowment reached $19.3 billion last fiscal year, the highest it has ever been in the University’s history.

Jack R. Meyer, president and CEO of the Harvard Management Corporation (HMC)—the group in charge of managing Harvard’s endowment—attributed Harvard’s above-average growth to the diversity of its portfolio.

“We have many assets that universities don’t usually have in portfolios—emerging markets, high yield, foreign bonds, timber, commodities,” he said. “These things helped us a lot.”

HMC purchased a 468,000-acre forest—estimated to be worth $540 million—in New Zealand last month, bringing the University’s total timber holdings to approximately 10 percent of the endowment.

Damon J. Manetta, a NACUBO spokesperson, said that in addition to its “alternative investments,” Harvard’s in-house investment staff helped the University achieve its relatively high rate of growth.

“There’s a direct correlation between staff and size. I believe [Harvard] has the largest investment staff. An in-house manager is almost a necessity for growth,” Manetta said.

The HMC compensation system for investment staff, which rewards fund managers based on individual performance, has recently come under increased scrutiny for paying $107.5 million in salaries and bonuses to its top six managers [Please see related story, page 1].

Yale University, which had returns of 8.8 percent on an endowment worth almost $11 billion, does not employ in-house money managers.

—Staff writer May Habib can be reached at

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