Tags: harvard | endowment | cash

Harvard Endowment Increases Cash

By    |   Tuesday, 25 Aug 2009 03:32 PM

Harvard University’s endowment is increasing its cash holdings amid expectations of lower returns and hopes it can take advantage of attractive investment opportunities.

“I’d like us to be strategic investors, and I’d like us to be able to respond to whatever needs the university might have,” Jane Mendillo, Harvard’s CEO for endowments, told Bloomberg.

“Based on those two things, being able to access some small pocket of cash is important.”

Harvard earned an average annual return of 13.8 percent in the decade through mid-2008, according to Bloomberg.

But the endowment dropped an estimated 30 percent in the year ended June 30, as derivatives positions and other investments turned sour.

Harvard has a long-term return target of 8.25 percent a year. “We’re not always going to be outperforming our expectations,” Mendillo says.

“We still have a lot of uncertainty in our economy and in the markets in which we operate.”

Endowments have historically averaged a cash holding of just 0.5 percent of assets, as they seek the higher returns of other investments, according to consulting firm Greenwich Associates.

Mendillo led Harvard into its first timber investment, and the university is in a “really good position” with that part of its portfolio, she says.

Harvard’s shift to cash illustrates the division among experts as to where the best investment opportunities are.

Investment guru Laszlo Birinyi thinks they’re in stocks.

“This is a bull market,” he told The New York Times. He’s buying blue-chips like Apple.

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Harvard University’s endowment is increasing its cash holdings amid expectations of lower returns and hopes it can take advantage of attractive investment opportunities.“I’d like us to be strategic investors, and I’d like us to be able to respond to whatever needs the...
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Tuesday, 25 Aug 2009 03:32 PM
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