Harvard University’s endowment has posted its first year of negative returns since 2016.
The Ivy League school’s endowment posted a -1.8% return on investment in fiscal 2022, according to an annual report released Thursday by Harvard Management Company.
Its total value for the fiscal year ending June 30 was $50.9 billion, compared to $53.2 billion in 2021.
The last time Harvard’s endowment delivered a negative return was 2016, when it lost 2% on its investments, The Harvard Crimson reported.
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The CEO of the Harvard Management Company, N.P. Narvekar, cited several factors as having negatively affected the endowment this fiscal year, including the “poor performance of global equity markets over the course of the year,” which he described as having the “most significant impact.”
“The S&P 500, Nasdaq Composite, Nasdaq Small Cap and the ACWI — benchmarks for domestic and global equities — declined by 11%, 23%, 27% and 16%, respectively,” he said.
Two other factors he mentioned were fiscal year 2022 not being a “strong benchmark relative year” and the firm not embracing non-renewable energy investments.
“A number of institutional investors leaned into the conventional energy sector, through either equities or commodity futures, adding materially to their total return,” Narvekar wrote.
“HMC did not participate in these returns given the university’s commitment to tackling the impacts of climate change, supporting sustainable solutions and achieving our stated net-zero goals.”
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Harvard Management Company vowed in 2020 to make the endowment net-zero in terms of greenhouse gas emissions by 2050.
Narvekar also noted in the letter that managers of private funds may have “not yet marked their portfolios to reflect general market conditions,” making Harvard Management Company “cautious about forward-looking returns in private portfolios.” Harvard’s “strongest performers” were its “private portfolios of venture capital, buyout and real estate,” according to the CEO.
“We expect that the end of the current calendar year might present meaningful adjustments to these valuations, as investment managers audit their portfolios,” he said. “Under existing accounting conventions for venture portfolios, investment managers generally use the most recent round of financing to mark investments.”
In 2022, over $2.1 billion was provided by the endowment for Harvard’s annual operating budget, according to Harvard Management Company.
The university’s endowment was worth $53.2 billion at the end of fiscal year 2021, when it delivered 33.6% returns.
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