Harvard's Manager Beats the Hedgies

Courtney Comstock Clusterstock September 10, 2010

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After a disastrous 2008 and a crappy 2009, Harvard's endowment fund, now led by Jane Mendillo (pictured), is up 11% as of June 30th (the end of their fiscal year).

Compared to its benchmarks, the returns are mediocre. Says Dealbook:

-- The Standard & Poor’s 500-stock index rose 14.4% in the period.

-- Harvard’s internal benchmark is a portfolio that gained 9.4%.

-- Harvard also has a benchmark that is a portfolio of 60 percent stocks and 40 percent bonds, which rose 12.6 percent.

-- Another comparison is the 13.3 percent median return of institutional plans.

Compared to hedge funds, however, which Harvard's endowment fund has been in the past (partially because it also pays its managers controversially well, but also because of criticisms that dreadful returns in 2008 were the result of the endowment's managing money like a hedge fund), its +11% returns look pretty spectacular. Many hedge funds' portfolios are showing negative returns so far in 2010.

Here's how Mendillo describes her strategy this past year:

The endowment was more liquid and “well aligned with the long-term need of the university and with regard to the world more broadly.”

No other universities have reported their endowments' returns yet.

Harvard's Manager Beats the Hedgies

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