* Harvard remains committed to emerging markets stocks
* Endowment beats benchmark by 98 basis points
* FY 2012 pales in comparison to 21.4 pct. gain in FY 2011
BOSTON, Sept 26 Harvard University said
Wednesday its $30.7 billion endowment slipped 0.05 percent in
fiscal 2012 as its stock investments in emerging markets took a
It was a far cry from the school's performance in fiscal
2011, when its endowment grew 21.4 percent.
But Harvard's return for the fiscal year that ended June 30
beat its benchmark by 98 basis points. While it was the third
straight year Harvard Management Company beat its benchmark, it
underscored what analysts say will be weaker returns at many of
the nation's top colleges and universities.
Last week, the University of Pennsylvania said its endowment
gained only 1.6 percent during fiscal 2012, lifting its
endowment to $6.8 billion.
In a statement, Harvard Management Chief Executive Jane
Mendillo described choppy markets "highly sensitive to
unresolved macroeconomic headwinds."
"While investment performance over the last 12 months was
well below long-term averages, we nevertheless found good
investment opportunities through both internal and external
management that we believe will sow the seeds for future
growth," Mendillo said.
Harvard said it remains committed to investing in emerging
market stocks, even though that asset group experienced a 17.43
percent decline, lagging their benchmark by 148 basis points.
Overall, though, Harvard's investments in public equities
fell 6.66 percent, but that was 239 basis points better than the
benchmark, Harvard said.
"We should note that Harvard carries relatively more
exposure to both foreign and emerging markets than many of our
peers," the university said in its report. "... We remain
convinced that active investing in emerging and international
markets is not only wise, but imperative over the long-term."
Unlike many other big universities, Harvard manages a chunk
of its portfolio in-house. It also uses outside managers, some
of whom previously worked for the university's investment arm.
After Mendillo took the top job at Harvard Management in
2008, she was forced to reposition the school's portfolio
dramatically as the financial crisis took a huge bite out of the
Harvard said distributions from the endowment in fiscal 2012
contributed more than a third of the university's operating
budget. Endowment income supports Harvard's academic programs,
science and medical research, and student financial aid, the
The endowment has earned an average annual return of 12.3
percent over the past 20 years, outperforming its so-called
policy portfolio benchmark by more than 300 basis points per