The Boston Globe said the losses resulted from Harvard financial executives placing a big chunk of the school’s cash with Harvard Management Co. The management company oversees the investments of the university’s endowment
Daniel S. Shore, Harvard’s chief financial officer, told the Globe that the approach worked with up markets, but later turned disastrous when the investment markets collapsed last year. Shore would not say exactly how much cash the university had added to Harvard Management, but it was more than in prior years, he said.
“We were invested fairly heavily with them and that’s what led to the losses,” Shore said in a interview with the Globe.”The problem as much as anything was we weren’t as diversified as we could’ve been.”
The $1.8 billion of lost cash comes as the nation’s largest endowment shed $11 billion in value, ending the year with $26 billion in assets and prompting firings and internal restructuring at Harvard Management (see Yale Follows Harvard with Deep Endowment Losses ). In June, Harvard laid off staff, offered others a voluntary retirement program, and cut expenses across the campus.
On top of the cash losses, the school lost $500 million getting out of interest-rate swaps that backfired, the Globe reported.
The Harvard report is available here .
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