Kenneth Rogoff, a professor at Harvard University, comments on the data that revealed a contraction in the US economy in the second quarter.
The Harvard University Foundation has posted its first year of negative returns since 2016.
The Ivy League school foundation reported a -1.8% return on investments in fiscal 2022, according to an annual report released Thursday by Harvard Management Company.
Its total value for the fiscal year ended June 30 was $50.9 billion, compared to $53.2 billion in 2021.
The Harvard Widener Library on the Harvard University campus in Cambridge, Massachusetts, September 5, 2015. (iStock / iStock)
The last time Harvard’s foundation had a negative return was in 2016, when it lost 2% of its investments, The Harvard Crimson reported.
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Harvard Management Company CEO NP Narvekar cited several factors that have negatively impacted the foundation this fiscal year, including the “poor performance of global stock markets throughout the year,” which he called the “most significant” impact .”
“The S&P 500, Nasdaq Composite, Nasdaq Small Cap and ACWI — benchmarks for domestic and global equities — fell 11%, 23%, 27% and 16%, respectively,” he said.
Two other factors he mentioned were that fiscal 2022 was not a “strong benchmark relative year” and that the company had no investments in non-renewable energy.
“A number of institutional investors have leaned into the conventional energy sector, either through equities or commodity futures, and significantly enhanced their total returns,” Narvekar wrote.
“HMC has not participated in these returns as the university is committed to addressing the impacts of climate change, supporting sustainable solutions and achieving our stated net zero goals.”
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Harvard Management Company pledged in 2020 to bring the foundation to net-zero greenhouse gas emissions by 2050.
Pedestrians walk in Harvard Yard at Harvard University on August 30, 2018 in Cambridge, Mass. (Scott Eisen/Getty Images/Getty Images)
Narvekar also noted in the letter that private fund managers “may not yet have labeled their portfolios to reflect general market conditions,” making Harvard Management Company “cautious about forward-looking returns in private portfolios.” Harvard’s “top performers” have been its “private portfolios of venture capital, acquisitions and real estate,” according to the CEO.
“We expect that the end of the current calendar year could bring meaningful adjustments to these valuations as investment managers review their portfolios,” he said. “Under existing accounting conventions for venture portfolios, investment managers generally use the most recent round of funding to flag investments.”
People walk past an entrance to the Widener Library on the Harvard University campus in Cambridge, Mass., in this July 16, 2019 file photo. (AP Photo/Steven Senne, File/AP Newsroom)
In 2022, according to Harvard Management Company, over $2.1 billion was allocated by the Foundation towards Harvard’s annual operating budget.
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The university’s endowment was valued at $53.2 billion at the end of fiscal 2021, when it returned 33.6%.
