Harvard Enjoys 19.2% FY 2005 Endowment Performance

September 30, 2005 (PLANSPONSOR.com) - With the pending departure next week of its top money manager, Jack Meyer, Harvard University said Friday that its endowment earned 19.2% in fiscal 2005, boosting its funds to $25.9 billion.

Returns for the year ended on June 30, 2005 slightly lagged the 21.1% gain in the previous fiscal year, but still beat the 15.8% median return of the 25 largest university endowments, the school said in a statement, Reuters reported.

The school also tapped Peter Nadosy, a board member of Harvard Management Co., as interim chief investment officer while officials locate a permanent replacement for Meyer.

Meyer is leaving to start a hedge fund, Convexity Capital Management, after 15 years as chief executive officer of Harvard Management Co (See  Harvard’s Money Management Dream Team to Resign ). During his tenure, Meyer helped quadruple the endowment’s size, but his managers’ huge pay packages – $25 million each for his two top managers in fiscal 2004 – has prompted complaints from some alumni at a time when the university was facing budget constraints.

The fund’s private equity position posted the year’s highest return, at 34.7%, while foreign bonds achieved the best performance relative to their benchmark, with a 20.3% return against the benchmark’s 7.9%, the school reported.

For years the university has been top-ranked among large university endowments. In the 10 years ended on June 30, 2005 the endowment earned an annual return of 16.1% and has seen only two years of losses. In fiscal 2001 the endowment lost 2.7% and in fiscal 2002 it was off 0.5%.