Harvard announced their endowment figures last week.
HMC [Harvard Management Company], which invests the University’s endowment and other financial assets, announced today that during fiscal 2019, the endowment’s value increased 4.3 percent, to the reported $40.9 billion; during the prior year, its value had appreciated 5.7 percent, to the reported $39.2 billion. Thus, in absolute terms, the endowment’s value increased $1.7 billion during the fiscal year just ended (not adjusted for inflation). It is the growth in real, inflation-adjusted value over time that goes a long way toward determining how much the University can increase spending on its academic mission (hiring faculty members, providing financial aid, running libraries and laboratories, etc.).
All that matters for any school is what it can spend from its endowment, now and forever.
Comparisons among institutions need to be drawn carefully. Each institution’s operations, finances, risk profile, and therefore investment strategies and assets are unique, making raw performance comparisons more of a horse race than a rational guide for analysis. (For instance, Yale and Stanford own and consolidate the financial results of their medical schools’ large hospitals; Harvard-affiliated hospitals are separate entities; and Princeton has no such affiliations, nor most of the professional schools that loom large at the other three universities.) Moreover, for an endowment meant to function in perpetuity, investment returns over a year or three matter less than longer-term results—at least over an entire business cycle. For large university portfolios, heavily invested in illiquid alternative assets like private equity, performance is properly measured in multiyear increments. HMC has been redeploying funds heavily within such asset classes during the past two years of restructuring; those investments will not mature for many years, so its reported results may be at a different stage than those of peers with more established portfolios.
You can read more about Harvard’s endowment here.
Post by Marcelino Pantoja