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  • Harvard richer than ever

    - Harvard, the world’s richest university, grows even richer. Its asset managers achieved a 21,4% return on their investments within the past year. This boosted Harvard’s endowments to a total of $32 billion.

    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 endowments.

    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 reforms.

    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 know."


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