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Harvard Management Company, the firm that oversees the University's multi-billion dollar endowment, recently invested in “at least one cryptocurrency fund,” according to a report published by The Information last month.

HMC, which declined to comment, joined several other big-name universities — including Stanford and MIT — in choosing to invest in cryptocurrency, The Information reported. CNBC previously reported that Yale University, whose endowment is led by David F. Swensen, invested in Andreessen Horowitz’s first cryptocurrency fund, as well as in Paradigm, a new cryptocurrency fund.

Matt Huang, Paradigm’s co-founder, declined to comment, as did a representative for Andreessen Horowitz.

N.P. “Narv” Narvekar, who took over as HMC’s CEO in December 2016, wrote in the 2018 iteration of his annual letter that he is “not pleased” with this year’s returns, which clocked in at 10 percent. Only Columbia University, which posted 9 percent returns, lagged behind Harvard among the school's Ivy League peers.

Investing in cryptocurrency — a newcomer to the financial world — is widely considered to be a risky move given the currency exists entirely online. While cryptocurrenty investments produced some skyrocketing gains early on, investors lost billions of dollars in a crash earlier this year.

In his annual letter to Harvard affiliates, Narvekar wrote that “asset allocation — or risk level — was the dominant factor in the overall returns.” He also wrote that he “will soon engage the HMC board of directors in conversation to determine Harvard’s risk appetite.”

A move to invest in cryptocurrency seems to signal that "risk appetite" is relatively high.

Michael Sonnenshein, a managing director at digital currency investment firm Grayscale Investments, dismissed the notion that endowments’ investments in cryptocurrency expose the groups to an inordinate amount of risk.

“Most endowments are already in the high risk assets, be it venture capital or other investments that have high risk-reward profiles,” he said.

Sonnenshein, who said several universities have chosen to invest their endowments in Grayscale products, said investors are seeking cryptocurrency opportunities because it helps to diversify holdings. He also said his firm has noticed a recent uptick in schools’ interest in cryptocurrency.

“Over the last 9 to 12 months, there's definitely been a material change in the level of engagement that my team has had with endowments, pensions, and other large institutional investors,” he said.

Robert J. Shiller, a Nobel Prize-winning Yale economist, said endowments’ willingness to invest in cryptocurrency does not equate to a full-throated endorsement of the digital asset.

“What I imagine happened at Harvard Management and Yale is that somebody came and gave a presentation from one of these funds and showed how there seems to be inefficiencies in this market and they can benefit from that,” he said. “It wasn't giving them an endorsement. It was hoping to buy and sell at a higher price later.”

Shiller, who called cryptocurrency a “high-risk investment,” cautioned against pouring large sums of money into cryptocurrency funds.

“Yale, according to David Swenson, in the early nineteenth century put its whole endowment into one bank called the Eagle Bank and it went bankrupt,” he said. “They don't do that anymore. I think crypto is much riskier than the Eagle Bank.”

—Staff writer Andrew J. Zucker can be reached at andrew.zucker@thecrimson. com. Follow him on Twitter @AndrewJZucker.