Friday, September 11, 2009

Harvard and Yale Announce 27.3 Percent & 30 Percent Endowment Declines

The New York Times reports that Harvard and Yale have disclosed the extent of their endowment losses during the last fiscal year, ended June 30, 2009.  For Harvard the decline was 27.3 percent, or more than $10 billion, to $26 billion.  In announcing the results, the Harvard Management Company's report stated it was reviewing its long-term strategy for its portfolio and had re-organized its personnel structure.  The article notes that available information indicates the losses were particularly pronounced in private equity investments, which not only lost value but in some cases required investors - including Harvard - to provide additional cash.  Even with the losses, however, the Management Company still reported a 10-year average annualized return of 8.9 percent and a 20-year return of 11.7 percent.

Yale reported a 30 percent decline to $16 billion, and Yale President Richard C. Levin stated in the letter announcing the results that the endowment payout had declined 6.7 percent for the current academic year, as compared to the previous year, and would decline by an additional 13 percent in 2010-11, at which level it would likely remain for the next several years.  He noted these figures are based on projections that the endowment will not decline further during the current academic year and will begin to grow again after June 30, 2010.  As a result of these declines, "another round of reductions will be necessary," including accelerating a previously announced 5% reduction in non-salary expenses from 2010-11 to the current academic year.

Additional coverage:  BloombergBoston Globe, Reuters, Wall Street Journal.

LHM

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