Your independent source for Harvard news since 1898

Your independent source for Harvard news since 1898

John Harvard's Journal

The Endowment Eases

November-December 2012


Harvard’s endowment was valued at $30.7 billion last June 30, the end of fiscal year 2012—a decline of $1.3 billion (4.1 percent) from the prior year. That result, released September 26 in Harvard Management Company’s (HMC) annual report, reflects an investment return of -0.05 percent on endowment and related assets, following the robust return of 21.4 percent in fiscal 2011. The decline in the endowment’s value reflects the investment return (essentially nil); minus distribution of endowment funds to support University operations and for other purposes (perhaps $1.5 billion; the exact sum will be reported in late October); plus gifts received. Endowment distributions account for about one-third of Harvard’s annual revenues.

Domestic equities yielded a return of 9.65 percent, but international stocks declined sharply, producing an overall return of -6.66 percent for public equities—about one-third of the invested assets. Private equities and absolute-return assets (principally hedge funds)—together, about 30 percent of assets—yielded slightly positive returns. Fixed-income holdings (about 10 percent of the total) yielded 7.95 percent. Real assets were mixed, with strong gains in real estate, positive returns in natural resources (timber- and farmland), and significant losses in the commodities portfolio.

Peer institutions’ results demonstrated the important interplay of endowment investment returns, spending, and gifts from capital campaigns. At Yale, a 4.7 percent investment return for fiscal 2012 nearly offset distributions of about $1 billion, so the endowment declined only marginally during the year, from $19.4 billion to $19.3 billion. Stanford’s investments earned only 1 percent, but the endowment rose 3.2 percent in value, to $17 billion, as a surge of campaign gifts apparently more than offset nearly $900 million in spending.

HMC president and CEO Jane L. Mendillo cautioned that “at a time of unusual turbulence with significant macroeconomic issues facings regions around the world…future returns may be uncertain,” but expressed confidence in a strategy of focusing on highly diversified investments and “long-term value creation.”

For a detailed report on Harvard’s endowment performance, see http://harvardmag.com/endowment-12.

You Might Also Like:

The American Repertory Theater will remain at the Loeb Drama Center, on Brattle Street in Cambridge, for several more years, before moving to a new performing-arts center planned in Allston.

Photograph by John Phelan/Wikimedia

Harvard American Repertory Theater Moving to Allston

Exterior of the ArtLab

Photograph by Clare O’Keefe

Allston ArtLab Prepares to Open

Click on arrow at right to see full image gallery
(1 of 4) 
Adams House, encompassing buildings ranging from Colonial America to Harvard’s Depression-era creation of the  House system (and trisected by city streets), poses design and construction challenges as renewal nears.

Courtesy of Beyer Blinder Belle 

Harvard Adams House Renewal

You Might Also Like:

The American Repertory Theater will remain at the Loeb Drama Center, on Brattle Street in Cambridge, for several more years, before moving to a new performing-arts center planned in Allston.

Photograph by John Phelan/Wikimedia

Harvard American Repertory Theater Moving to Allston

Exterior of the ArtLab

Photograph by Clare O’Keefe

Allston ArtLab Prepares to Open

Click on arrow at right to see full image gallery
(1 of 4) 
Adams House, encompassing buildings ranging from Colonial America to Harvard’s Depression-era creation of the  House system (and trisected by city streets), poses design and construction challenges as renewal nears.

Courtesy of Beyer Blinder Belle 

Harvard Adams House Renewal