Harvard’s endowment falls $800M in weak markets

A day after Yale reported a surprisingly strong endowment return, Harvard University announced Wednesday that its holdings had fallen victim to broader market declines, losing $800 million in value during the fiscal year that ended June 30.

Harvard’s endowment, now worth $18.3 billion, remains the largest university endowment in the nation, but the negative 2.7 percent return marked the first time since 1984 that Harvard’s investments lost money. Yale reported Tuesday that despite recent market turbulence its endowment rose 6 percent from $10.1 billion to $10.7 billion in the last fiscal year.

“Returns over the last 10 years have been sufficiently strong to provide a cushion against an extended rainy day,” Harvard Management Company President Jack Meyer wrote in a letter to university officials and alumni. “We remain confident in the ultimate resilience of both our economy and our financial markets.”

Several other major universities are expected to post investment losses, Yale administrative sources said.

Harvard has averaged a 17 percent annual return over the last five years, which helped propel its endowment as high as $19.1 billion in 2000.

Yale’s endowment, at $10.7 billion, is the second-largest university portfolio. It had a 9.2 percent return in 2000-2001.

Most other universities have not yet released updated endowment figures, but it is widely assumed that the average college endowment decreased in value during the 2001 fiscal year, making Yale’s positive return stand out.

Yale administrators have boasted privately that the University’s endowment significantly outperformed those of rival institutions. They are quick to praise the work of the Yale Investment Office led by Chief Investment Officer David Swensen.

The status of Yale’s endowment relative to Harvard and Princeton is a near obsession for to Yale officials. Yale’s endowment has historically been about one-half of Harvard’s endowment. The difference between the two last year was $9 billion. With Yale’s continued growth and Harvard’s decrease in the last year, the gap is now $7.6 billion.

Like Yale, Harvard’s endowment income is a major component of its operating budget, providing $615 million of the university’s $2 billion budget.

Yale’s endowment chips in $305 million to its $1.4 billion budget.

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