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O reason not the need!

This guy calls it tragic that

Harvard is paying a team of professional fund managers as much as $5 million [apiece] per year to lose the university more than $9 billion over the last five years compared to a passive, indexed investment in the S&P 500.

He weeps that if they’d invested more wisely, “[Harvard’s] endowment would have grown to more than $42 billion, instead of $33 billion.”

(Does he know that only a few years ago Harvard fund managers were paid $35 million a year apiece? Let us not tell him! He is sad enough.)

Aye, and if they’d invested yet more wisely, Harvard’s endowment might have grown to $420 billion… Howl, howl, howl, howl! Oh, you professional fund managers are made of stone! If I were you with eyes and a tongue to speak with, I’d crack heaven wide open with my laments! Tens of billions gone forever. I know how to tell when an endowment is alive or dead. Harvard’s is as dead as the cold ground. If you have tears, prepare to shed them now.

Margaret Soltan, July 9, 2014 8:11AM
Posted in: harvard: handouts

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4 Responses to “O reason not the need!”

  1. Bernard Carroll Says:

    It’s the OPM syndrome – other people’s money. The smart lads doing the gambling, er… investing, have no skin of their own in the game. The most they stand to lose is an obscene bonus on top of a guaranteed already obscene base salary. That they can con their bosses in Harvard’s administration to tolerate this performance is an unflattering reflection on both parties.

  2. Mr Punch Says:

    Those higher-paid managers made a lot of money for Harvard. It’s the current lower pay scale that doesn’t seem to be working.

  3. Margaret Soltan Says:

    Mr Punch: Not true. They made money some years and lost money some years. And Yale had better longer-term investment results than Harvard, and they managed it without paying their managers anywhere near 35 million each.

  4. david foster Says:

    Setting aside for the moment the question of portfolio management….given the size and long-term growth trend of the Harvard endowment, why does this institution not use some of its money to set up a few Clone institutions, say, Harvard West, Harvard Midwest, and Harvard South…thereby extending the benefits of what (it doubtless believes to be) its superior educational experience to a much larger group of students? There are certainly a sufficient number of excellent professors and potential students to make this quite possible.

    The reason, I suspect, is that this would dilute the Gatekeeper role to elite employment which many Harvardians believe that their university should perform…and hence, would also dilute the financial value of a Harvard degree to current alumni and their children. One analogy would be limiting the number of prints of an art object to optimize the total dollar value of the run.

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