Harvard Endowment Returns 10% in 2018

Improved performance still lags other major universities.

Harvard University’s endowment returned 10% for the fiscal year that ended June 30, as the portfolio’s market value grew to $39.2 billion from $37.1 billion at the same time last year, according to Harvard Management Co.

The returns were up from last year’s “disappointing” 8.1%, as described at the time by CEO Narv Narvekar. However, the returns underperformed what several other major university endowments have reported this year, such as MIT (13.5%), University of Pennsylvania (12.9%), Dartmouth (12.2%), University of Virginia (11.4%), and University of Texas (11.27%).

“HMC, as an organization, and the endowment portfolio are still in the early stages of a multi-year transition, with much work ahead,” Narvekar said in a letter to the university’s community. “Thanks to the exceptional team we have at HMC, we are confident in the direction of the organization and the long-term prospects for the endowment.”

Narvekar said additional details of the endowment’s 2018 performance, such as its annualized returns, how each asset class performed, and their current allocation, will be available when the management firm releases its annual report, which is expected to be on Oct. 25.

Last year, Narvekar announced that the endowment would overhaul its investment management structure, saying that the weaker-than-expected returns were a “symptom of deep structural problems.”

He said the management firm was moving to a generalist model from a so-called “silo” approach where investment managers focused only on specific asset classes. Narvekar said the old approach overemphasized individual asset class benchmarks, and created unintended consequences, such as gaps in the portfolio, and unnecessary duplication.

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