Harvard's endowment grows by $4.4B to reach $32B

AP News
Posted: Sep 22, 2011 9:03 PM
Harvard's endowment grows by $4.4B to reach $32B

Harvard University said on Thursday that its largest-in-the-nation endowment earned a profit of $4.4 billion in fiscal 2011, growing to a robust $32 billion.

It marks the second year in a row of strong growth for an endowment that fell by $11 billion to $26 billion during the fiscal year that ended June 2009. The endowment grew to $27.6 billion in the 2010 fiscal year.

Harvard Management Company President and CEO Jane Mendillo said active management of investments to meet the primary objectives of growth, liquidity and risk management secured growth in the latest year.

The endowment has earned an average annual return of 12.9 percent over the past 20 years.

Harvard's endowment helps to fund the school's educational and research programs, including student financial aid for more than 60 percent of undergraduate students receiving scholarships totaling more than $160 million this year.

During the last financial year, distributions from the endowment contributed almost a third of the operating budget.

"We are increasingly conscious of the importance of results, liquidity, and risk management, given the university's high level of dependence on the endowment and also the significant downturn in the markets since our fiscal-year close," Harvard treasurer James Rothenberg said.

The endowment comprises about 12,000 individual funds, many of them restricted to specific uses such as support of a research center or the creation of a professorship in a specific subject. The funds are invested by Harvard Management Company, which also oversees the school's pension, trust funds and other investments at a significant savings when compared to outside management.

Mendillo, however, warns that current political and market turmoil have created difficult conditions that make future returns uncertain.

"Since the end of the fiscal year the markets have been exceptionally volatile, driven by concern and uncertainty related to the debt ceiling debate, the fate of the Euro zone, the S&P downgrade of the U.S. Treasury securities, and indications of slowing growth in economies at home and abroad," Mendillo said. "The impact of these issues on our portfolio is unavoidable."

"The good news is that we have gained flexibility through the restructuring of the portfolio in recent years which allows us to take some advantage of declining valuations under the right circumstances," Mendillo said.


Associated Press writer Rodrique Ngowi can be reached at http://www.twitter.com/ngowi