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Experts Predict Strong Harvard Endowment Returns Ahead of October Report

Several financial experts predicted that the Harvard endowment will post returns of at least 20 percent when it releases figures for fiscal year 2021 in October.
Several financial experts predicted that the Harvard endowment will post returns of at least 20 percent when it releases figures for fiscal year 2021 in October. By Amy Y. Li
By Virginia L. Ma and Kevin A. Simauchi, Crimson Staff Writers

Several financial experts predicted that the Harvard endowment will post returns of at least 20 percent when it releases figures for fiscal year 2021 in October, forecasting that strong markets will boost the University’s recovery from the pandemic and bring its endowment to its largest sum in history.

“It was in fact a year of historic investment returns, so I’m sure the numbers will come in at least 20 percent,” said New York University finance professor David L. Yermack ’85. “Whether they’re really up to the levels of the other schools and the broad market benchmarks — that's the real question.”

The expectations come as colleges and universities across the country are reporting record returns on their endowments. This month, the University of Pennsylvania reported a 41.1 percent return for its endowment in fiscal year 2021, while Duke University posted returns of 55.9 percent.

Overall, university endowments returned a median 27 percent for fiscal year 2021, the 12-month period ending in June 2021, according to a report from Inside Higher Ed. For universities with endowments larger than $500 million, returns averaged 34 percent.

Yermack, a former Crimson Managing Editor, said a strong stock market and promising returns from other investment asset classes led to high returns for large endowment funds, including those of higher education institutions.

“I think, overall, everybody made money for this period,” Yermack said.

Yermack noted, however, that some higher education institutions with large endowments, including Harvard, tend to disproportionately invest in alternative asset classes such as hedge funds and private equity, adding a layer of uncertainty in predicting returns.

“We have no idea what they’re going to report,” Yermack said. “I’m sure the numbers will be positive, but whether they’ll be as good as the regular markets is anyone’s guess,”

Charles A. Skorina, who heads a financial executive headhunter firm, corroborated Yermack’s prediction of a 20 percent return, saying he anticipated Harvard’s returns would be higher than in recent years, but not as high as its peer institutions. He said HMC Chief Executive N.P. “Narv” Narvekar tends to pursue a “balanced” investment strategy and does not “swing for the fences.”

Harvard’s endowment returned 6.5 percent and 7.3 percent in fiscal years 2019 and 2020, respectively.

Thomas D. Parker ’64, a senior associate at the Institute for Higher Education Policy, said a big difference between 2020 — when markets had an off year — and this year was the gradual recovery from the Covid-19 pandemic.

“We’re all just breathing a little bit easier because at the end of last year in the midst of Covid, there was some real concern that this might be the start of a long-term decline,” Parker said.

Parker cautioned, however, that while reported returns have been promising, market stability is still uncertain, especially with the rise of the Delta variant.

“In this semi-recovery from the Covid downturn, we really do have a rising tide which is floating all boats,” Parker said. “On the other hand, it’s a strange rising tide because the tide is rising, and then we have a whole bunch of astrologers sitting around saying, ‘The whole tide may recede and we may be back to the bare mud banks here pretty soon because things are too frothy — they’re too good.’”

“It’s just such a tricky time to try to talk about what any of this past year’s performance really means,” he added.

Harvard Management Company spokesperson Patrick S. McKiernan declined to comment on expectations for the Harvard endowment’s performance, writing that the HMC’s annual report will be available next month.

Despite his forecasts, Skorina advised in an email that October’s report could still swing in unexpected directions.

“Predictions have a way of pooping on the predictor, which is why I don’t usually make predictions,” Skorina wrote.

—Staff writer Virginia L. Ma can be reached at

—Staff writer Kevin A. Simauchi can be reached at Follow him on Twitter @Simauchi.

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