Harvard Management Company Completes Restructuring Plan a Year Early

Harvard Management Company, which oversees Harvard University’s $41.9 billion endowment, has finished what was intended to be a five-year organizational and investment restructuring plan more than one year ahead of schedule.

Harvard Management Company CEO N.P. “Narv” Narvekar, who initiated the plan shortly after he was hired in late 2016, announced the completion of the restructuring in a message to Harvard University affiliates, according to The Harvard Crimson.

Prior to Narvekar’s tenure, Harvard Management Company used a hybrid investment model that involved a large internal staff as well as outside money managers. The firm had also engaged in a strategy of “silo investing” where its investment professionals focused their work within specific asset classes.

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But Narvekar decided to change this approach and cut the size of the firm’s workforce in half. He wrote in Harvard’s 2017 financial report that the silo method overemphasized individual asset class benchmarks and created unintended consequences, such as gaps in the portfolio and unnecessary duplication. He instead switched the approach to a generalist investment model in which all members of the investment team take ownership of the entire portfolio.

“When I took this position, it was clear to me that the time had come for an aggressive plan to restructure HMC and create the necessary organizational and investment culture,” Narvekar wrote in 2017. “Overall, I believe the silo approach did not lead to the best investment thinking for a major endowment.”

And in his most recent message to Harvard affiliates more than three years later, Narvekar, who first experienced the generalist investment model at the University of Pennsylvania (UPenn)’s endowment and brought the approach to Columbia and Harvard, said the firm has shown improvement as a result of the new strategy.

“While we understand the advantages of specialization,” he said, according to The Crimson, “HMC benefits meaningfully from having a team of talented and skilled investors who search for the best risk-adjusted returns for the entire portfolio, regardless of investment structure, asset class, or manager.”

Narvekar also said the firm is “comfortable” with the results of the restructuring so far. And in October, after Harvard reported 7.3% returns for fiscal year 2020, he said he was proud of the progress his team had made.

“Of course, we note that we need 10 fiscal years, not merely two, to prove ourselves fully,” Narvekar said. “Like everyone else, HMC will have good years and bad over that period. We will remain focused on the long-term performance, not on year-to-year performance.”

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Tags: Endowments, Harvard, Harvard Management Company, Narv Narvekar, restructurings

A cryptocurrency trader accused of making false representations in connection with funds he operated has been charged with commodities fraud and wire fraud offenses. Jeremy Spence, 24, who also goes by the sobriquet “Coin Signals,” allegedly took cryptocurrency worth over $5 million from more than 170 investors.

The US Attorney’s Office for the Southern District of New York said Spence lured investors to his alleged cryptocurrency investment scam by claiming that his trading of investor funds had generated a return of more than 148% in just one month. But according to the complaint against him that was unsealed in Manhattan federal court, Spence’s trading had been “consistently unprofitable” and used new investor funds to pay back other investors—the hallmark of a Ponzi scheme. The complaint alleges Spence distributed cryptocurrency worth at least $2 million to investors from funds previously deposited by other investors.

“Spence’s investments not only failed to reach his audacious claims, they consistently lost money, leaving a $5 million void in his clients’ crypto accounts,” Manhattan US Attorney Audrey Strauss said in a statement. “Spence’s alleged conduct should strongly signal would-be investors to thoroughly educate themselves in the cryptocurrency ecosystem before falling prey to investment scams promising huge returns for small investments that are indeed too good to be true.”

Spence solicited investments for several funds, the largest and most active of which were the Coin Signals Bitmex Fund, the Coin Signals Alternative Fund, and the Coin Signals Long Term Fund. Investors looking to invest in a fund would transfer cryptocurrencies such as Bitcoin and Ethereum to Spence to make the investment.

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To prevent investors from making redemptions, and to continue to raise money from them, Spence allegedly created fake account balances that he made available to investors online that falsely showed they were making money instead of accurately reporting the trading losses Spence was racking up.

Spence is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of commodities fraud, which carries a maximum sentence of 10 years in prison.