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Endowment Returns Outpace National Average

By Andrew M. Duehren and Daphne C. Thompson, Crimson Staff Writers

For the first time since the 2012 fiscal year, Harvard’s endowment grew at a faster rate than the national average for American colleges and universities last fiscal year, according to a National Association of College and University Business Officers and Commonfund Institute report released last week.

Harvard’s endowment, managed by the Harvard Management Company, grew by 5.8 percent in the last fiscal year, exceeding the NACUBO national average of 2.4 percent for private colleges and universities. The endowment, which rose to $37.6 billion in the 2015 fiscal year, also outpaced the average growth rate of endowments valued over $1 billion—4.3 percent.

While Harvard beat national averages this year, it still lagged behind several peer institutions in return on investment. Yale and Princeton, for example, grew at rates of 11.5 percent and 12.7 percent respectively, and the Massachusetts Institute of Technology boasted returns of 13.2 percent. Last October, University President Drew G. Faust said she is concerned about the endowment’s lackluster returns.

FY 2015, which ended June 30, 2015, was a year of transition for HMC. Stephen Blyth started at the helm of Harvard's investment arm in January 2015, and he has begun making changes to HMC’s structure and compensation methods. Several staff departures have also followed during Blyth’s tenure.

In HMC’s 2015 FY report, Blyth urged investors to take a longer-term view of the endowment returns.

“Like many, I believe that the annual ‘horse race’ between endowment returns is counterproductive to fostering the appropriate long-term investment strategies suitable for Harvard,” he wrote, suggesting that the endowment’s performance should be viewed in a “rolling five-year window.”

Harvard’s endowment has not yet recovered from the $11 billion loss it suffered during the 2008 financial crisis, according to the 2015 FY report. While its nominal value is higher than ever before, when adjusted for inflation, Harvard’s endowment remains smaller than its peak in 2008.

—Staff writer Andrew M. Duehren can be reached at Follow him on Twitter @aduehren.

—Staff writer Daphne C. Thompson can be reached at Follow her on Twitter @daphnectho.

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Central AdministrationEndowmentHarvard Management Co