Harvard University's endowment fund grows to $36.9 billion

13 September 2008

In a year of extraordinary market turbulence, Harvard University's $36.9-billion endowment earned 8.6 per cent on its investments in the latest fiscal year while stock markets around the world were losing money, Harvard Management Co., the university's investment arm that manages the endowment, said yesterday.

The Ivy League school, the wealthiest in the US is famous for relying on hedge funds to bring top returns, performed far better than Standard & Poor's 500 index that lost 13.1 per cent during fiscal 2008, which ended on June 30.

The 8.6 per cent return brings the biggest endowment in higher education to $36.9 billion from $34.9 billion last year. The cause for the endowment increasing by only 5.7 per cent was due to the highest spending from the endowment in Harvard history.

Harvard Management said its endowment, which grew $2 billion during the fiscal year, distributed $1.6 billion to the university to support teaching, research and student aid.

The Harvard Magazine reported in its online edition, "In seven investment classes, HMC results exceeded those for the appropriate market benchmarks: domestic, emerging-market, and private equities; real assets (including all three subcategories of commodities, timber and agricultural land, and real estate); and domestic, foreign, and inflation-indexed bonds. In three classes, HMC performance fell short of market benchmarks: foreign equities, absolute-return funds, and high-yield assets."

For the first time this year students whose parents earn less than $60,000 a year could attend Harvard free. It also reduced tuition fees to households earning $180,000 a year. They now pay a maximum of 10 per cent of their income on room and board.