University endowments that reported annual returns saw mixed results during an extraordinarily volatile 2020 fiscal year that ended June 30.
While the largest endowments performed well due to their large allocations to private investments, smaller and midsize endowments are prioritizing liquidity as the institutions they support face financial challenges, industry observers said.
The two largest university endowments reported similar results for the fiscal year ended June 30.
Harvard University's $41.9 billion endowment returned a net 7.3% for the fiscal year, while Yale University's $31.2 billion endowment returned a net 6.8% for the same period, both well above the median return of 5.1% among the 26 university endowments with $1 billion or more in assets that had reported results by Oct. 14.
Nirmal P. "Narv" Narvekar, president and CEO of Harvard Management Co., which oversees the Cambridge, Mass.-based university's endowment, said in a note to Harvard associates that the "team remains confident that the changes being made to both the portfolio and the organization's systems, structure and culture will serve the university well and generate the long-term returns on which Harvard relies."
Since Mr. Narvekar became CEO in December 2016, he has remodeled HMC's investment strategy to a generalist model in which all members of the investment team take ownership of the entire portfolio, from the previous strategic approach.
Both Yale and Harvard trailed fellow Ive Leaguer Providence, R.I.-based Brown University, which reported the highest return at a net 12.1%.
Its $4.7 billion endowment's return well exceeded its primary benchmark of 3.1% for the fiscal year ended June 30.
In an Oct. 1 news release, the university cited its partnerships with "exceptional investment managers" as the primary driver of its performance.
Information regarding individual asset classes was not disclosed, and spokesman Brian Clark said Jane Dietze, the university's vice president and chief investment officer, was not available for an interview.