The endowment of Harvard University, managed by the Harvard Management Co., returned 9.6% in fiscal 2024, the university announced Thursday in its fiscal year financial report. With assets of $53.2 billion at the end of the fiscal year, Harvard maintains its spot as the largest university endowment in the world.
The endowment outperformed its target return of 8%, with the university aiming to reach a 5% return to account for distribution and another 3% to maintain purchasing power. The endowment has returned an annualized 9.3% over the past seven years, since HMC CEO Narv Narvekar joined the fund, according to the announcement.
In fiscal 2024, the HMC allocated approximately 39% of its portfolio to private equity, 32% to hedge funds, 14% to public equities, 5% to real estate, 5% to bonds/TIPs, 3% to other real assets—including natural resources—and 3% to cash.
The endowment returned 2.9% in fiscal 2023 and negative 1.8% in fiscal 2022. Harvard’s most recent fiscal year returns put it in the middle of the pack compared with its peers. Other Ivy League endowments that have announced returns include Columbia (11.5%), Brown (11.3%), Cornell (8.7%), Dartmouth (8.4%) and Penn (7.1%). Yale and Princeton have yet to report.
These endowments, known for their large allocations to alternative investments (colloquially known as the Yale model pioneered by that endowment’s late CIO David Swensen), have had their returns under scrutiny the past couple of years. In fiscal 2022 and 2023, many of these endowments posted single-digit or negative returns due to muted returns in the private markets.
For most alternatives-heavy endowments, fiscal 2024 was a rebound year. While critics point out that these funds still underperformed a 60/40 or 70/30 portfolio, proponents of the Yale model argue that their portfolios provide outperformance over the long term.
“Public equity returns are often outpaced by private equity—both buyouts and venture capital,” Narvekar wrote in the report. “However, in FY24, for the second year in a row, private equity returns lagged those of public equity markets. Readers will recall that in FY22, private managers did not reduce the value of their investments in a manner consistent with declining public equity markets at the time. As presaged in that year’s letter, those private asset managers did not subsequently increase the value of their investments in the context of rising public equity markets in fiscal years 2023 and 2024.”
The percentage of the university’s budget derived from distributions from the endowment continues to climb, Narvekar noted in HMC’s report. In fiscal 2024, the endowment distributed $2.4 billion toward the university’s operating budget, approximately 37%, up from 31% 10 years ago and 21% 20 years ago.
“The ever-increasing reliance on this critical resource makes our work all the more important,” Narvekar wrote in the report. “We are motivated by the fact that our efforts directly support an institution that serves as a global leader in teaching, learning, research, and the groundbreaking advancements its community makes each day.”
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Tags: Harvard, Harvard Management Company, Harvard University, Ivy League, Narv Narvekar
