According to Mendillo, HMC will begin to move a larger proportion of the total portfolio from external firms and place them under internal management, “given the benefits of our hybrid model, including the alignment of interests, cost efficiency, and greater transparency.” In particular, HMC’s fixed income and natural resources desks have performed exceptionally well.

As a part of developing its internal investment team, HMC is devoting its resources to investigating new opportunities abroad, especially in China.

“Not only is it an important market today—but as we look five to ten years down the road. Harvard has enough connections into China, and it’s a really good time for us to be developing our knowledge base,” Mendillo said.

During the financial crisis of 2008, Harvard’s endowment suffered heavy losses, plummeting by nearly 30 percent to $22.6 billion from $36.9 billion.

In fiscal year 2010, the endowment posted a gain of 11 percent. While HMC outperformed its benchmark of 9.4 percent, it fell short of the S&P 500 Index, which rose by 14.4 percent that same year. At the time, Mendillo said that the modest gains were due to the fact that Harvard had 20 percent less of its assets in equities—a strategy that Mendillo is still implementing to minimize year-to-year volatility.

Harvard’s endowment contributes annually to the revenues of each of the University’s schools. While HMC invests the money, the Harvard Corporation, the University’s highest governing body, determines the endowment payout rate—or the percent of the endowment that the schools will receive to pay for part of their operations.

“We are increasingly conscious of the importance of results, liquidity, and risk management, given the University’s high level of dependence on the endowment and the significant downturn in the markets since our fiscal-year close,” University Treasurer James F. Rothenberg ’68 said in a press release.

—Staff writer Gautam S. Kumar can be reached at gkumar@college.harvard.edu.

—Staff writer Zoe A. Y. Weinberg can be reached at zoe.weinberg@college.harvard.edu.