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Following Harvard Management Company’s announcement that it returned 6.5 percent on its investments for fiscal year 2019, University President Lawrence S. Bacow said he continues to support HMC CEO N.P. “Narv” Narvekar and the University’s five-year plan to restructure its endowment management.

Narvekar announced a five-year plan to improve the University’s declining endowment returns in January 2017 after he was hired to manage the $40 billion fund. Specifically, Narvekar said he wanted to shift HMC’s strategy to have a more “generalist” approach and require all members of the University’s investment arm to bear responsibility for Harvard’s entire portfolio.

Bacow said he is “confident” in Narvekar’s five-year plan and that the endowment cannot be judged by one year of a low rate of return.

“I think we're on target for where we're going to be, but we'll see,” Bacow said. “Ask me two to three years from now."

The 6.5 percent return is the lowest return rate in two years, as 2017 saw an 8.1 percent return and 2018 yielded a 10.1 percent return.

Harvard has lagged behind other Ivy League institutions in recent years and fell this past fiscal year behind both Brown and Dartmouth — who posted 12.4 percent and 7.5 percent returns, respectively — but posted a higher return than the five other Ivy League universities.

Bacow said the University needs to be patient with Narvekar’s plan and said there are “technical reasons” why changes shouldn’t be made too quickly.

“There are commitments that were made forward, which can't be rolled back, and it takes a while to not only exit from certain investments, but also to move resources into another area,” Bacow said. “You don't want to try and time the market.”

Bacow also said the University is still waiting to hear back from United States Treasury Department with final rules for filing a new excise tax on its investment returns. The tax — passed by Congress in December 2017 — will levy an excise tax on universities with at least 500 tuition-paying students and total assets of at least $500,000 per student.

“We've weighed in and expressed a point of view on their proposed regulations,” Bacow said. “But until we have the final regulations, it's hard to say precisely how it will affect different parts of the University and in different ways.”

Harvard jointly submitted a formal opposition to the tax with more than 30 other colleges and universities to the Treasury Department more than two weeks ago.

“We remain opposed to this damaging and unprecedented tax that will not only reduce resources available to colleges and universities to promote excellence in teaching and to sustain innovative research, but also to increase access for low and moderate-income families through financial aid,” the letter read.

Harvard has the largest endowment of its kind in the world, valued at $40.9 billion. The fund supports many of the University’s operating costs. Roughly one-third of Harvard’s operating budget comes from the endowment each year.

In recent years, the University’s endowment has come under increased scrutiny as student activists have targeted investments like those tied to the fossil fuel industry, private prison companies, and Puerto Rican debt.

—Staff writer Alexandra A. Chaidez can be reached at alexandra.chaidez@thecrimson.com. Follow her on Twitter @a_achaidez.

—Staff writer Aidan F. Ryan can be reached at aidan.ryan@thecrimson.com. Follow him on Twitter @AidanRyanNH.