MONEY MANAGEMENT

Harvard endowment to lay off half its staff, streamline investment operations

Harvard University
Harvard University

Harvard Management Co., Boston, is reorganizing its staff as part of its plan to change its investment strategy, according to a letter to the Harvard community from CEO Nirmal P. “Narv” Narvekar obtained by Pensions & Investments.

HMC, which manages Harvard University's $35.7 billion endowment, will reduce the size of its 230-person staff by about half by Dec. 31.

The changes follow Mr. Narvekar taking over as president and CEO on Dec 5.

The reorganization is due to HMC changing its investment strategy from a specialized or “silo” approach to a generalist investment model in which all members of the investment team take ownership of the entire portfolio. It also plans to outsource management of most of its assets, but did not give specifics.

As a result, active hedge fund-like investments managed internally at HMC now comprise “a very small percentage of the overall endowment,” according to the letter. Remaining internally managed hedge fund teams will depart HMC by June 30.

The team responsible for managing HMC's direct real estate investments is expected to spin out and become an external manager by Dec. 31, the letter said.

Its natural resources portfolio, focused on timber and agriculture investing, will continue to be managed internally for the time being.

Harvard's endowment posted a -2% return for the fiscal year ended June 30, below the 1% return of Harvard's benchmark policy portfolio.

In addition to the staff reductions, HMC also has recruited a chief investment officer and three managing directors to its investment team, confirmed spokeswoman Emily Guadagnoli.

Richard Slocum will join as chief investment officer in March, while Vir Dholabhai and Charlie Saravia will join as managing directors of the investment team on Jan. 30, and Adam Goldstein will join as managing director on Feb. 6.

The positions are new. All four executives will report to Mr. Narvekar.

Mr. Slocum was CIO of The Johnson Co., while Mr. Dholabhai was senior risk manager for APG Asset Management U.S. Mr. Saravia co-managed P1 Capital, and Mr. Goldstein was a managing director of investments at Columbia Investment Management Co.

Mr. Dholabhai's responsibilities are being covered by the global team and a search for an additional member of the U.S. risk team is underway, said Jennifer Bainbridge, spokeswoman for APG Asset Management U.S.

David Collis, a partner at P1 Capital, could not disclose information on a potential replacement at this time. Robert Hornsby, a spokesman for Columbia University, declined to comment on a replacement, and Johnson Co. officials could not be reached for comment.