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Harvard Returns 10 Percent on Endowment ‘With Much Work Ahead’

By Derek K. Choi, Nathan A. Cummings, and Jessica M. Zhu
By Eli W. Burnes, Lucas Ward, and Andrew J. Zucker, Crimson Staff Writers

Harvard Management Company returned 10 percent on its investments during fiscal year 2018, bringing the total value of the University's endowment to $39.2 billion.

The returns, announced in a note from CEO N.P. Narvekar to Harvard affiliates Friday afternoon, mark an improvement from last year’s return of 8.1 percent and a serious turn-around from the loss of $2 billion in fiscal year 2016.

Narvekar, who previously oversaw Columbia University’s endowment before joining Harvard’s investment arm in December 2016, wrote in his message that he remains “confident” in the endowment management group’s future. This is the second round of endowment returns Narvekar has produced during his tenure at Harvard.

“As is well known, HMC, as an organization, and the endowment portfolio are still in the early stages of a multi-year transition, with much work ahead,” Narvekar wrote. “Thanks to the exceptional team we have at HMC, we are confident in the direction of the organization and the long-term prospects for the endowment.”

But Harvard — as it did last year — is still trailing those of its Ivy League peers who have posted their returns. The University’s 2018 results fall short of the University of Pennsylvania’s returns, which clocked in at 12.9 percent, and Dartmouth’s returns of 12.2 percent.

The University also lagged behind the S&P 500, which returned 14.37 percent in the fiscal year ending June 30, 2018.

Harvard’s endowment — by far the largest university endowment across the globe — funds many of the school’s operating costs and is used to ensure Harvard can count on consistent funding in the near future. Roughly one-third of the University’s operating budget is drawn from the endowment each year, though its schools depend on the investment fund to varying degrees. For example, the Faculty of Arts and Sciences, Harvard’s largest unit, received about half its operating budget from the endowment in 2016.

The unusually brief note from Narvekar — three short paragraphs in total — stands in stark contrast to the five-page letter he sent out announcing last year’s returns in which he also detailed his plan to overhaul the endowment. Narvekar noted Friday, however, that he will offer further details in the University’s financial report next month “for those interested.”

Since Narvekar took the helm of HMC in December 2016, the endowment has shifted from a “silo” model — in which managers focus on individual asset classes — to a generalist model, in which managers are responsible for the entire portfolio and compensated for overall performance. Narvekar has also moved to downsize HMC and outsource some investments, including spinning off the school’s real estate division to Bain Capital. In January 2017, he announced that HMC planned to lay off half of its staff as part of the five-year overhaul.

In recent years, HMC has struggling to address its historically poor portfolio performance and has continually underperformed its peer institutions.

The news of the 2018 endowment returns comes shortly after Harvard wrapped up its record-shattering capital campaign. In total, the University raised $9.6 billion, surpassing its original goal by more than $3 billion.

Correction: Oct. 1, 2018

A previous version of this article misstated the returns seen by the S&P 500 in fiscal year 2018. It has been updated.

—Staff writer Eli W. Burnes can be reached at

—Staff writer Andrew J. Zucker can be reached at Follow him on Twitter @AndrewJZucker.

—Staff writer Lucas Ward can be reached at Follow him on twitter at @LucaspfWard.

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