Looking at Harvard’s Endowment

Daniel Gross looks at the (mis)management of Harvard’s endowment portfolio. Or as he says, “looks like it was chosen by someone who watched a few episodes of CNBC’s Squawk Box and heard that the hot new investments were emerging markets, commodities, and private equity.”
Gross writes:

The biggest position disclosed—all amounts and dollar values are as of Sept. 30—was $463 million in the iShares MSCI Emerging Market fund. As the six-month chart shows, that fund’s off nearly 60 percent from this summer and down by about one-third from the end of September. Third-largest was a $233 million position in Weyerhauser, the wood-products giant that has fallen about 40 percent since the end of September. The top 10 included $232 million in the iShares MSCI Brazil Index Fund, off about 40 percent since the end of September; about $51 million in the iPATH MSCI India Index, off about one-third since the end of September; and $158 million in the iShares FTSE/Xinhua China Index, off about 30 percent since the end of September. For good measure, top 10 holdings also included index funds that were plays on South Africa’s commodity-based economy and on the perennially emerging market of Mexico. Would it surprise you to learn that both of those investments, after fairing poorly in the third quarter, have fallen further in the fourth quarter?

I think Gross is being a bit unfair here. Harvard only has to disclose its position in publicly traded companies, and that’s “only” $2.9 billion, or less than 8% of its portfolio. For any long-term investor, which Harvard certainly is, you can safely reserve 8% of your portfolio for play money.

Posted by on November 18th, 2008 at 1:39 pm


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