"They're in an ivory tower. They don't knowwhat's going on in the real world," Gordon said."They know they're not going to lose the accountand there's little chance that they're going to befired except for internal power struggles."

Some of the critics have suggested that Harvardconsider investing in a firm like the widelyrespected Common Fund for Nonprofit Organizations,a Connecticut-based cooperative that manages thepooled endowments of several hundred colleges,universities and independent schools.

The Common Fund, with more than $7 billion inendowment funds under its management, farms themoney out itself to private managers.

Since 1976, the average Common Fund member hasearned an annualized rate of return of 13.2percent on its endowment. Harvard, by contrast,has earned 11.9 percent over roughly the sameperiod.

According to Bennett, Harvard was invited tojoin The Common Fund when the fund was establishedin 1971, but opted instead to create HMC.

"We decided not to do it, because we felt itwas a very good concept for a small to medium sizeendowment, but ours was large enough to befree-standing without participating," Bennettsaid.

Bennett and Common Fund President George F.Keane are reluctant to criticize Meyer or hispredecessor, Cabot. But both acknowledged thatHarvard probably would have done better as amember of The Common Fund than it has on its ownover the past two decades.

"The fact is that compared with other largeendowment funds, The Common Fund has generallydone a little better over time," Keane said.

HMC has invested some money with The CommonFund, and Meyer conceded that the fund has a goodperformance record.

"I think The Common Fund has done a nice job,"he said.

Still, the HMC president said that the fund'soverall mission differs from Harvard's and thatHMC has no current intentions of investing anymore money with outside managers.

Meyer, Rudenstine and Harvard Vice Presidentfor Finance Robert H. Scott said that Harvardwould likely pay higher management fees to privatefirms than it currently pays to run HMC.

"I'm quite confident that our costs aresignificantly less than if we went outside," Meyersaid. "I think that our after-cost return will behigher managing the assets as we do now ratherthan going to external managers."

But other investment managers disagree,suggesting that Harvard could easily find qualityindependent managers who charge prices comparablewith the $24 million Harvard invested in HMC infiscal 1991. That number--equivalent to nearly 50basis points, or fractions of a percent spreadover the whole endowment--was up $4 million fromthe year before.

"Indexing you can probably do for four or fivebasis points," said one alumnus and financialexpert, referring to the so-called "passive"investing of money spread out over standard stockand bond indices.