A situation where [Harvard’s] in-house investment managers are getting paid 50 times more than university professors, while delivering lackluster returns, is “politically not feasible,” [one expert] says.

Indeed, the news about Harvard’s endowment [the school just lost two billion dollars] led many to question the university’s approach and its costs. Mark J. Perry, a professor of economics and finance at the University of Michigan at Flint and a scholar at the American Enterprise Institute, estimates that Harvard spends at least $70 million on its endowment-management office. That’s almost enough to cover Harvard’s $45,000 tuition for its 1,600 freshmen.

… [I]f Harvard had passively invested in a standard mix of 60 percent stocks and 40 percent bonds, it would have gotten a higher rate of return — 8.9 percent over the past five years, versus 5.9 percent with its active in-house management …

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