Many big endowments face headwinds from lagging performance in private equity and venture capital.
Harvard University’s $50.7 billion endowment gained 2.9% in the last fiscal year as investments in private equity and venture capital dragged on its performance and those of some of its biggest rivals.
For the fiscal year ended June 30, Harvard’s endowment—the largest among U.S. universities—had only 11% of its assets in public equities, with 39% in private equity, and 31% in hedge funds. In his report last year, Harvard’s Narvekar warned that he was cautious about the future performance of the portfolio’s better-performing private equity and venture capital investments because they could be marked down as markets declined.
Narvekar took over in December 2016, and has since revamped the endowment. In the past six fiscal years, Harvard has pivoted from private real estate and agriculture, and timber investments to private equity, he wrote. The endowment also created a portfolio of liquid uncorrelated funds within its hedge-fund allocation. “These decisions proved to be successful,” Narvekar said.
Yale University’s $40.7 billion endowment notched a 1.8% return. The so-called Yale model, developed by longtime Yale endowment leader David Swensen, who died in 2021, emphasized alternative assets like venture capital, private equity and hedge funds.
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