Endowment Regains Summer Losses

Two months after Harvard reported an endowment drop over the summer of nearly $1.5 billion, the nation's largest university endowment has regained its losses.

"We've bounced back nicely," said Jack R. Meyer, president and CEO of the Harvard Management Company (HMC), which manages the University's endowment. He declined to comment on the extent of the rebound.

The endowment reached an all-time high of $13 billion in June after five consecutive years of higher-than-expected growth. The 10 percent loss of endowment value from June to September was 3 percentage points below HMC's benchmark, its internal goal for that period of time.

In September, citing stock market turmoil, Harvard officials maintained the decrease in the endowment value was not a long-term problem, but nevertheless they were still closely monitoring the situation.

The endowment gains over the past couple of months have come more quickly than administrators had anticipated.

"My guess is that we'll get most of it, if not all of this back, by the end of the year," Meyer said in September.

Meyer blamed the temporary dip in Harvard's investments in emerging markets, which accounted for nearly one-tenth of the entire endowment, and the investment of some of the University's other assets in a manner similar to hedge funds--private funds which perform risky trading in options and other derivatives.

But Meyer said the University made no changes to its investment policies.

Elizabeth C. "Beppie" Huidekoper, vice president for finance, attributed the recent rebound to "staying the course with our investment strategy" in an e-mail message yesterday.

According to Huidekoper, Harvard's recent policy change to increase endowment payout by a total of 20 percent depended on how the endowment fared

while the market was in a period of decline.

"We were looking to see if we could sustain higher spending levels," Huidekoper said.

She wrote in the message, however, that the endowment's rebound did not factor into last week's decision to increase spending.

Provost Harvey V. Fineberg '67 called the drop nothing more than "a blip," and said it was "irrelevant."

Blip or not, Harvard is not out of the woods yet.

Huidekoper said University accountants are examining the possibility of negative returns for the year, which would mean an actual loss of endowment value.

In contrast, HMC brought about a 25.8 percent increase last year, and the year before, a 26 percent rise in the endowment.

Huidekoper said the University expects to maintain average yearly returns of 10 percent in the future

while the market was in a period of decline.

"We were looking to see if we could sustain higher spending levels," Huidekoper said.

She wrote in the message, however, that the endowment's rebound did not factor into last week's decision to increase spending.

Provost Harvey V. Fineberg '67 called the drop nothing more than "a blip," and said it was "irrelevant."

Blip or not, Harvard is not out of the woods yet.

Huidekoper said University accountants are examining the possibility of negative returns for the year, which would mean an actual loss of endowment value.

In contrast, HMC brought about a 25.8 percent increase last year, and the year before, a 26 percent rise in the endowment.

Huidekoper said the University expects to maintain average yearly returns of 10 percent in the future