Harvard richer than ever

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23 september 2011 | 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 teachingat Harvard. Even more, the top university’s asset managers do anextremely smart job at making sure that the world’s richestuniversity gets even richer.

Within a year Harvard managed to realize a 21,4% return on itsinvestments, according to reports by Bloomberg andHarvard Magazine. This boosted its fundingendowment by $4,4 billion to a total of $32 billion ($23,6b).Approximately 1/3 of Harvard’s expenses are funded from theseendowments.

Universities in the Netherlands are publicly financed andtherefore do not invest capital to expand their wealth. Harvarddoes and successfully so. By comparison: While Harvard had anannual operating budget of $3,7 billion (€2,75m) in 2010 therichest university in the Netherlands is Utrecht University with atotal budget of €750 million followed by University of Amsterdamwith €613 million.

From crash to happiness

Back in 2008, when the crash of Lehman Brothers caused thefinancial crisis, Harvard suffered substantial losses on itsportfolio. An $8 billion (22%) decrease in value led to harshbudget cuts. Staff was fired, construction projects delayed andHarvard’s asset managers sold $2,5 billion (€1,8b) in bonds to havesufficient 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 executiveofficer of Harvard Management, said that the fund is “now happierwith the mix of managers and strategies it contains”. She herselfcan be happy too: since things turned out well, her paycheck roseto $3.5 million (€2,6m) in 2009.

Oracle: Derek Bok

Two years ago, former Harvard president Derek Bok alreadypredicted that the Harvard’s financial losses during the crisiswould be not only temporary, but also a great chance forreforms.

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, stoppingthings is. And this accumulates inevitably some slack, some fat.Therefore, a crisis like this is a big worry but also a healthyprocess of weeding things out. This is not a popular view, Iknow.”