Harvard Endowment Makes Minor Progress in Recouping Losses

September 10, 2010 (PLANSPONSOR.com) - Harvard University’s endowment earned an investment return of 11% for the year and was valued at $27.4 billion as of June 30.

Harvard said the return was 160 basis points above what would have been earned by the Harvard Management Company’s (HMC) benchmark policy portfolio. The endowment lost $11 billion or 27.3% of its value in the previous fiscal year, with a value of $26 billion at June 30, 2009, compared to $37 billion the year earlier (see Harvard Endowment Slammed with $11B FY Loss).  

According to a Harvard news release, the average annual return on the endowment over the last 20 years has been 11.9%, and over the last decade, 7%. HMC returns charted over both 10 and 20 years have outpaced a typical 60/40 stock/bond portfolio, the Wilshire Trust Universe Comparison Service (TUCS) median fund, and HMC’s own policy portfolio benchmark. On average over the last decade, HMC has added 5.1% annually over and above the 60/40 portfolio, 3.6% over the TUCS median fund, and 3.3% over the policy portfolio.  

The endowment’s total value is affected by several factors each year, including investment returns, new contributions, and the annual payout for University programs. In fiscal 2010, distributions from the endowment contributed more than a third of the University’s operating budget, Harvard said.