Weathering a rocky economy, Harvard University’s endowment surged to record $19.3 billion during the 2002-03 fiscal year, earning a 12.5 percent return, officials announced Tuesday. Harvard’s announcement came one week after Yale President Richard Levin said Yale’s endowment is poised reach an all-time high of $11 billion in the fiscal year ending June 30.
The sharp increases at Yale and Harvard bucked national trends, however, as other Ivy League universities saw modest increases and, in some cases, decreases in their endowments this year. The performances of Yale and Harvard were considerably stronger than the national return average of 2.9 percent over the past fiscal year, according to a recent survey of 122 educational institutions by the Commonfund Institute.
Both Yale and Harvard recovered from declines of 0.7 percent and 4.4 percent, respectively, in their investment returns last year, and officials at both schools attributed this year’s surprising increases to a steady investment policy.
“The positive 12.5 percent return for fiscal 2003 was a welcome change from the negative returns for fiscal 2001 and 2002 but does not signal that we are out of the financial woods,” Harvard Management Company President Jack Meyer said in a statement.
Harvard’s endowment grew this year from $17.5 billion, but it still lags behind its 2000 inflation adjusted record high of $19.1 billion. While Yale’s performance pales in comparison to its unparalleled 41 percent return in 2000, this year’s solid increase stands out amid a national economic downfall. Yale’s endowment remains the nation’s second largest, behind Harvard’s.
Levin commended Harvard on its sharp increase, but would not comment specifically on Yale’s endowment figures, which are expected to be released soon.
“Obviously [Harvard] had a very good year,” Levin said. “[Yale has] had extraordinary performance over a long period but we can’t expect to beat Harvard every year.”
Harvard’s investment return bested Yale’s for the first time in at least three years.
“Experience teaches that a key to strong long-term investment performance lies in protecting assets during times of troubled markets,” Meyer said. “HMC was able to do this during a difficult three-year period.”
Harvard’s portfolio had about 30 percent in stocks, both foreign and domestic, 13 percent in private equity and 12 percent in hedge funds, among other investments, Meyer told the Associated Press. Real estate holdings comprised 10 percent, commodities 13 percent and bonds, including those indexed to inflation, about 22 percent, he said.
Yale does not reveal details of its investment portfolio.
This year, the University of Pennsylvania and Brown University also saw increases in their endowments. Penn’s marked a 4.7 percent increase, bringing its endowment to $3.5 billion. Brown’s rose to $1.48 billion, a 3.34 percent increase.
Meanwhile, Princeton University and Dartmouth College experienced decreases this year. Princeton’s endowment for the fiscal year that ended March 30 declined by 5 percent to $7.9 billion. Dartmouth’s endowment slipped to $2.1 billion.
While the Massachusetts Institute of Technology has not yet released its endowment figures, it announced that it would cut next year’s operating budget by $70 million, hinting that its endowment would decrease. Columbia, Cornell and Stanford universities have not released their endowment figures yet.