For Harvard University, this year's bull market proved disappointing.

For the first time in six years, Harvard has fallen short of projected investment returns from its multibillion-dollar endowment--the University nest egg.

Overall, investments of Harvard's endowment, the largest of any University in the world, grew 7 percentage points less than the goal set by Harvard's money managers, increasing 12.2 percent to bring the endowment to $14.4 billion.

For the last five years, Harvard has averaged a return of 20.1 percent.

Being below benchmark means a lower bonus for Jack R. Meyer, the CEO and president of Harvard Management Company, which oversees the University's endowment, as well as other money managers who work for him.

"The people who did well will be paid very well," said Meyer, whose associates have been known to earn eight-figure salaries. "Mine will certainly drop...sharply down."

The University's money managers largely blame the poorer investment performance on their inability to put more money into venture capital funds--potentially lucrative funds that provide start up money for small companies.

Venture capital funds have been very successful over the last year. But Harvard was not able to invest in them to the extent it would have liked, Meyer said.

Seeking a diverse group of investors, venture capital fund managers placed caps on the amount each investor could place in their funds.

"That means a lot less goes to Harvard than Harvard would like," Meyer said.

Those policies hit Harvard especially hard, Meyer said. Since the Harvard endowment is so large, the small amounts the school was able to invest in venture capital funds had much less impact on Harvard's total holdings.

"This year, size really did hurt us," Meyer said.

Staying the Course

Despite the disappointing returns, Harvard Vice President for Finance Elizabeth C. "Beppie" Huidekoper predicts the University will not change its investment strategy regarding venture capital.

Money managers will continue to attempt to push for large investments in these lucrative funds.

While areas like emerging markets, real estate and commodities underperformed their benchmarks--the goals set by HMC--other staples of the Harvard portfolio were very successful.

"I describe this performance as mixed," Meyer said.

In particular, domestic stocks fared well, outperforming their benchmark by 4 percentage points.

The poor performance of Harvard's real estate investments, which fell short of their target by double digits, was largely a result of setting goals too high, Meyer said.

Meyer blamed the University's money managers outside HMC for much of the University's failure to meet its overall benchmarks. In particular, investments in emerging markets fared even worse, falling 17 points short of their benchmark.

This year's return marks the first significant setback to Harvard's investors in years. Despite a 10 percent dip in endowment value last summer, the University managed to recover its losses and turn in a 20.5 percent return last year,

"We got it all back and then some," Meyer said. "We just stuck to what we do well."