A Global Endowment

Harvard’s endowment is spread out among hundreds of companies, thousands of acres of real estate and dozens of start-ups. The list of companies that HMC invests in runs the gamut from 160 shares of Martha Stewart Living to 877,000 shares of Exxon Mobil, HMC filings show.

And there are billions more that Harvard spreads out among select external managers, primarily Charlesbank and Highfields Capital, which now manages almost $2 billion, according to SEC filings.

Meyer says that he’s quite happy with the performance of HMC’s outside managers but that HMC could pull out of these investments at any time, should the University “lose confidence in their ability to add value.”

In the last two years, HMC has benefited from unprecedented returns in venture capital—which is largely responsible for last year’s $4.8 billion endowment increase last year. HMC’s investments in venture capital returned 413 percent last year, Meyer says.

“Harvard has benefited enormously from a once-in-20-year return,” says Professor Richard C. Marston of the Wharton School for Business.

But the risk involved in such investments can only be stomached by a large endowment, Marston says.

“An ordinary endowment could not follow the same kind of strategy,” he says.

Industry experts say Harvard’s endowment is large enough to balance the risk of large investments in venture capital with other “alternative assets.”

“Something that’s risky is not always imprudent. These investments are certainly prudent,” Manning says.

“When you look at them individually, they may look risky, but you need to look at them in the context of the whole portfolio,” Meyer says. “We’re pretty happy where we are right now.”

Investing Responsibly