Track record big factor in hiring of new Harvard CEO

Harvard Management Co.'s new CEO had the track record to set himself apart, according to an executive with the search firm tasked with finding candidates for the top spot.

Nirmal P. “Narv” Narvekar was named president and CEO on Sept. 29 of Boston-based HMC, which manages Harvard University's $35.7 billion endowment. Effective Dec. 5, he will replace interim CEO Robert Ettl, who took on the role after Stephen Blyth resigned in July for personal reasons. Mr. Ettl will resume his role as chief operating officer.

Harvard's new leader hails from Columbia University Investment Management Co., where as president and CEO since 2002, he oversaw investment strategy for Columbia's $9 billion endowment.

Executive search firm David Barrett Partners conducted the search.

“There was a high level of interest. The search committee had very good options,” said David Barrett, managing partner, in a phone interview. “But ultimately, Narv's track record both as an investor and as a team leader clearly distinguished him.”

Effective Oct. 3, Mr. Narvekar will be replaced by Peter Holland, now the Columbia endowment's chief investment officer, confirmed Columbia spokesman David Stone.

Columbia University's endowment returned 7.6% on investments for the fiscal year ended June 30, 2015. Its annualized five-year and 10-year returns as of June 30, 2015, net of fees, were 12.3% and 10.1%, respectively. The New York-based university has not yet released its fiscal year 2016 figures.

Information on benchmarks was not available.

By comparison, Harvard University's endowment has experienced both several leadership challenges and lackluster returns in recent years. Including interim leaders, Mr. Narvekar will become HMC's seventh CEO since former President Jack Meyer left in 2005.

Harvard University's endowment returned -2% on investments for the fiscal year ended June 30, 2016, below the 1% return of Harvard's benchmark policy portfolio.

For the fiscal year ended June 30, 2016, the endowment earned an average annualized return, net of fees, 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.

Harvard's endowment ranked 12th out of 26 colleges and universities studied by Pensions & Investments last year in terms of annual returns, returning 5.8% for the year ended June 30, 2015, although that is below the average of 6.2%. Meanwhile, its 10-year annualized return as of June 30, 2015, was 7.6%, ranking 14th out of 23 colleges and universities and below the average of 8%.

In 1990, when Mr. Meyer held the reins, he established a “hybrid” model of investing at HMC in which Harvard would both allocate money to outside managers and also manage investments in-house. Some industry observers have speculated that the HMC board is looking to move away from the hybrid model that Mr. Meyer established, given that it hasn't provided the superior returns it once did.

The two endowments also differ in how their assets are allocated.

Data from P&I show that as of June 30, 2015, Harvard allocated 30% to equities, 24.5% to real assets, 18% to private equity, 16% to hedge funds and 13.5% to fixed income. Columbia, meanwhile, allocated 28.9% to hedge funds, 23.6% to private equity, 18.9% to equities, 16% to real assets, 9.7% to cash and 2.9% to fixed income.

In a release, Mr. Narvekar said he was honored to help support the mission of Harvard University. “I look forward to working with the HMC board and team and using my investment experience to serve Harvard in the most effective way possible.”

Mr. Narvekar was not available for further comment. Before joining Columbia, Mr. Narvekar was a managing director in the office of investments at the University of Pennsylvania, where he focused primarily on building the hedge fund and private equity portfolios. Before that, he held positions at J.P. Morgan & Co., including managing director, equity derivatives group and vice president, private placement advisory group.

Charles A. Skorina, founder of San Francisco-based executive search firm Charles A. Skorina & Co., which specializes in the hiring of CIOs, called Mr. Narvekar a talented investor and leader, and noted he has challenges ahead.

“I hope he has the mandate to do what he feels he needs to do. If what's needed is to come in and shake things up, it'll be a good job,” he said. “He's got to be the lion in the cage; he can't let the bureaucracy win. The bureaucracy will push back.”

Scale is another challenge. Mr. Skorina noted that Mr. Narvekar is “used to doing a good job with 20 to 25 people. Now, he's in a situation where he's got 10 times the people. It can overwhelm someone.” n