Harvard Endowment

[canadianoutlaw]

Interesting article about the Harvard endowment's poor returns...

https://www.bostonglobe.com/business/2016/09/22/harvard-endowment-investment-return-drops-percent/e6Jj6GYxhpLOnpVH6kPI3L/story.html

[jhwkr542]

Haha, thanks for posting. It takes some really smart people to figure out how to lose 2% of investments this year. That's why they're at Harvard and I studied at state school u.

[Hatton]

I remember reading a book a few years back on the Yale endowment.  I think this where the trendy emphasis on alternative investments came from.  Timber, real estate, private equity, and metals all expensive for the little guy to buy.  Turns out investing in Vanguard indexes may not be trendy but it pays the bills.

[canadianoutlaw]

seriously - how can they have a return like that with a market like this? doesn't make a lick of sense to me

[PhysicianOnFIRE]

Meanwhile, the S&P 500 is up 6.2% and my own PoF portfolio is up 9.9% YTD

[chrisCD]

It wasn't clear from the article, but are the losses before or after the salaries paid to the staff that manages it?

[Craigy]

chrisCD wrote:

It wasn’t clear from the article, but are the losses before or after the salaries paid to the staff that manages it?

Click to expand...

It's a multibillion (with a B) dollar endowment so salaries should be a pretty small fraction of a percentage.

[childay]

200 employees?

For anyone interested

http://www.hmc.harvard.edu/docs/Final_Annual_Report_2016.pdf

 

 

[jhwkr542]

childay wrote:

200 employees?

For anyone interested

http://www.hmc.harvard.edu/docs/Final_Annual_Report_2016.pdf

 

 

Click to expand...

I seriously could not stop laughing at this line from the summary: "However, we recognize that execution was also a key factor in this year's disappointing results."

[East coast]

Endowments, as well as foundations/family offices etc., are totally different beasts than our personal finance world, so tough to draw comparisons. For those laughing at the returns, Harvard has done pretty well (especially relevant for the long-term investors of this board!):

Average annualized return of 5.9% over the past five years, vs. 5.4% for its benchmark; 5.7% for 10 years, compared with 4.8% for its benchmark; and 10.4% over the past 20 years, vs. 7.7% for the benchmark.

 

[PhysicianOnFIRE]

East coast wrote:

Endowments, as well as foundations/family offices etc., are totally different beasts than our personal finance world, so tough to draw comparisons. For those laughing at the returns, Harvard has done pretty well (especially relevant for the long-term investors of this board!):

Average annualized return of 5.9% over the past five years, vs. 5.4% for its benchmark; 5.7% for 10 years, compared with 4.8% for its benchmark; and 10.4% over the past 20 years, vs. 7.7% for the benchmark.

 

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There's that East Coast bias showing up. What is this, the Heisman vote?

[Zaphod]

I dont get it, they had a $1.7b distribution to the university, accounting for almost all of their loss? Their actual loss looks tiny considering the fiscal year it was in had the Aug flash crash, new year correction, and brexit. That volatility would hurt any type of fund.

[canadianoutlaw]

Follow up story gives a little more detail

https://www.thecrimson.com/article/2016/9/29/a-tale-of-two-endowments/

[janettebournes]

Thread bump

This time with a focus on Yale

https://www.yahoo.com/finance/news/yale-slammed-warren-buffetts-favorite-investing-advice-still-endorsed-203129137.html

"“[Low-cost passive index strategies] make sense for organizations lacking the resources and capabilities to pursue successful active management programs, a group that arguably includes a substantial majority of endowments and foundations,” Yale writes.

“However, Yale has demonstrated its ability to identify top-tier active managers that consistently generate better-than-market returns, after considering performance fees.”

Simply stated, Yale thinks low-cost index funds are good, they are just not good for Yale."

 

I think Madoff's clients probably made similar claims.

[Complete_newbie]

You need active managers. If everyone passively indexes then we will all be screwed. Be nice to the other party.

Also would be interested to see how the fund does in bear market.