Wednesday, December 03, 2008
From the Harvard Crimson:
Harvard’s endowment—the largest in higher education—fell 22 percent in four months from its June 30 value of $36.9 billion, marking the endowment’s largest decline in modern history, University officials announced yesterday.Unless a miraculous recovery occurs between now and next summer, the current fiscal year performance will be the worst since a 12.2 percent loss in 1974, one of only three years of negative returns in more than thirty years.
The precipitous drop will require Harvard’s faculties to take a “hard look at hiring, staffing levels, and compensation,” wrote University President Drew G. Faust and Executive Vice President Edward C. Forst ’82 in a letter informing the deans of Harvard’s losses.
The estimate of 22 percent may not fully capture the actual losses from this period, Forst said in an interview yesterday, as some of Harvard’s money is invested with external managers that have yet to report their latest figures. Faust and Forst wrote in yesterday’s letter that the University should plan for a 30 percent drop-off in endowment value for the year ending June 30, 2009.
For obvious reasons, the endowment fund managers are said to favor a high level of cash holdings and a reduced level of risk in the future.