World’s largest academic endowment lost money for the first time since 2016



CNN

The Harvard University Foundation lost $2.3 billion in fiscal 2022, attributing the loss to both the global market downturn and the university’s commitment to climate goals.

This is the fund’s first negative return since 2016, according to the university’s annual financial report released Thursday. The endowment — made up of more than 14,000 individual funds invested as a single entity — is managed by a university-owned investment firm called Harvard Management Company, or HMC.

During Harvard’s most recent fiscal year, which ended June 30, HMC lost 1.8% of its investments, taking the foundation’s total value to $50.9 billion.

In a letter Thursday, HMC CEO NP “Narv” Narvekar said the fund’s “most significant impact was the poor performance of global equity markets” in the first half of the trading year.

Both the S&P 500 and Nasdaq fell 11% and 23%, respectively, during the period, battered by concerns about rising inflation and higher interest rates.

Another factor, according to HMC, is the university’s commitment to climate goals.

“Some institutional investors have leaned into the conventional energy sector, either via stocks or commodity futures, and significantly increased their total returns,” Narvekar wrote. “HMC has not participated in these repatriations given the university’s commitment to addressing the effects of climate change.”

Energy stocks rallied earlier this year as Russia’s war in Ukraine pushed global oil prices to multi-year highs. Even with oil prices falling since then, the energy sector of the S&P 500 is still up more than 50% this year.

The loss follows a successful year for the fund, the world’s largest academic foundation. Its value increased by more than $10 billion to $53.2 billion in fiscal 2021 — the largest in the foundation’s history.

HMC noted the discrepancy between returns in fiscal 2021 and 2022, but emphasized the need to focus on long-term returns.

“We remain confident that the steps we have taken — and are ongoing — to build a portfolio that serves the university’s long-term interests will allow Harvard to continue its critical support of students, faculty and researchers for to sustain and strengthen for generations to come,” Narvekar said.

Harvard said the foundation supports nearly every aspect of the university’s work, including financial aid, preservation, and funding for staff and research. The fund contributed more than $2.1 billion to the university’s budget in fiscal 2022 — more than a third of its annual operating income.

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