Harvard as Hedge Fund

Wed, 04 Mar 2009 17:02:09 +0000

There is a fascinating post at DealBook by Steven Davidoff that takes a peek behind the curtain of high finance in higher education, using the Harvard University endowment as an illustration. An excerpt:

So, my numbers are rough, very rough estimates — but the problem is apparent. In the short term, unless it boosts its liquid returns, Harvard is going to have to raise a lot in donations or eat up its liquid assets to fund university obligations and its private equity commitments. This results in a spiraling decline in Harvard’s liquid assets as each year they go lower to meet these needs and more and more assets become tied up in private equity. This assumes the markets stay where they are in the next three years — there are scenarios where liquid assets do worse (like yesterday), or better, of course.

Read the whole thing.