http://www.reuters.com/article/domesticNews/idUSTRE55M66320090623 Harvard cuts 275 jobs, cites drop in endowment Harvard’s endowment, which stood at $37 billion on June, 30 last year, tumbled to $29 billion by December and is projected to end this month at about $25 billion, hit by volatility in financial markets and a drop in donations. The endowment funded about a third of Harvard’s operating budget in 2008.
above, unless you lose 30%+ of your assets.
i would say average(a tad on lower side) as reliance on endowment is significant 33%. the loss in portfolio is significant(almost 33% as well). this should imply that exposure in equity(in the crisis) should be lowered(albeit at a loss). The bonds should be doing fairly well as lower interest rates, however current income from bonds shall be lower too. Thus selling the bonds should be a way out to maintain income flow…i guess endowment shall be shifting to preserving value, money markets andthus reflects a tendency of low risk taking willingness. The ability remains average as still the value of endowment is significant. dont know if above made sense…but wrote randomly as am not answering an IPS qn of CFA
i’d say average. mostly becuase they fund a 1/3 of harvard’s op budget. this disallows them from reducing their contributions significantly to ‘rebuild’. significant increase. you can tell that they have little equity as the market is above even from dec to now and they are down another 14%. i’m thinking they will be holding onto their pe and moving much more into corp. bonds and similar instruments. the decline in bond values and even to down pe values (due to volatility) likely contributed to the 14% loss along with withdrawals.
Above average. Lets not fall victim to any behavioral/emotional traits because of one bad year. While the endowment makes up a significant percentage of their spending, it is still very sizable and more importantly the time horizon is still perpetual. Given the low interest rate environment, I would probably sell some FI to preserve the cap gains, and invest in more international equity, international corporates and commodities.