Harvard University’s endowment fund, which is the largest in the world, lost money over the past year. This is a big change from the year before, when it made double-digit gains.
The University’s Annual Financial Report, which came out on Thursday, says that this is the fund’s first loss since 2016. The Harvard Management Company, or HMC, is a university-owned investment firm that manages the endowment. The endowment is made up of more than 14,000 separate funds that are invested as a single entity.
In Harvard’s most recent fiscal year, which ended on June 30, HMC’s investments lost 1.8%, bringing the total value of the endowment down to $50.9 billion.
The university said that the return was a “a very good result,” even though the stock and bond markets have been going down. However, they did say that the 34% gain from last year, which brought the endowment to $53.2 billion, “has been tempered by this year’s market reversals.”
“The most important effect was the poor performance of global equity markets over the course of the year,” N.P. Narvekar, the head of Harvard Management, said in a letter released on Thursday.
Harvard University didn’t profit from traditional energy sector high returns
HMC said that the university’s commitment to climate goals is also important.
Narvekar said institutional investors placed more money into the conventional energy industry through equities or commodities futures, which boosted returns. Since the University is working hard to deal with the effects of climate change, HMC did not take part in these returns.
Russia’s war in Ukraine raised oil prices to the highest levels early in the year, boosting energy stocks. Despite falling oil prices, the S&P 500 energy sector is up more than 50% this year.
The endowment pays for financial assistance, maintenance, personnel, research, and teaching, according to Harvard authorities. The fund gave the University $2.1 billion in 2022, more than a third of its yearly operating income.
Because Harvard is so significant in size, its investment plans and returns are closely watched. Other well-known universities also said that the markets were hard for them because of things like out-of-control inflation, the war in Ukraine, and rising interest rates.
