As it seems there is not only smart people studying and teaching
at Harvard. Even more, the top university's asset managers do an
extremely smart job at making sure that the world's richest
university gets even richer.
Within a year Harvard managed to realize a 21,4% return on its
investments, according to reports by Bloomberg and
Harvard Magazine. This boosted its funding
endowment by $4,4 billion to a total of $32 billion ($23,6b).
Approximately 1/3 of Harvard's expenses are funded from these
Universities in the Netherlands are publicly financed and
therefore do not invest capital to expand their wealth. Harvard
does and successfully so. By comparison: While Harvard had an
annual operating budget of $3,7 billion (€2,75m) in 2010 the
richest university in the Netherlands is Utrecht University with a
total budget of €750 million followed by University of Amsterdam
with €613 million.
From crash to happiness
Back in 2008, when the crash of Lehman Brothers caused the
financial crisis, Harvard suffered substantial losses on its
portfolio. An $8 billion (22%) decrease in value led to harsh
budget cuts. Staff was fired, construction projects delayed and
Harvard's asset managers sold $2,5 billion (€1,8b) in bonds to have
sufficient cash at hand.
Now, Harvard can look again towards brighter times, being only
$4,9 billion (€3,6) away from its endowment peak of $36,9 billion
(€27b) before the crisis. Jane Mendillo, chief executive
officer of Harvard Management, said that the fund is "now happier
with the mix of managers and strategies it contains". She herself
can be happy too: since things turned out well, her paycheck rose
to $3.5 million (€2,6m) in 2009.
Oracle: Derek Bok
Two years ago, former Harvard president Derek Bok already
predicted that the Harvard's financial losses during the crisis
would be not only temporary, but also a great chance for
In his interview with ScienceGuide, Bok said that
"universities have never been good at getting rid of things.
Starting things in research or education is not so hard, stopping
things is. And this accumulates inevitably some slack, some fat.
Therefore, a crisis like this is a big worry but also a healthy
process of weeding things out. This is not a popular view, I