World’s largest academic endowment lost money for the first time since 2016

By Kate Trafecante

Harvard University’s endowment lost $2.3 billion in fiscal 2022, blaming the loss on both the global market downturn as well as the university’s commitment to climate goals.

This is the fund’s first negative return since 2016, according to the University’s Annual Financial Report, published on Thursday. The endowment — comprised of more than 14,000 individual funds invested as a single entity — is managed by a university-owned investment firm called the Harvard Management Company, or HMC.

During Harvard’s most recent fiscal year, which ended on June 30, HMC lost 1.8% on its investments, bringing the endowment’s total value down to $50.9 billion.

In a letter Thursday, HMC CEO N.P. “Narv” Narvekar said the “most significant impact of the fund was the poor performance of global equity markets” during the first half of the trading year.

Both the S&P 500 and Nasdaq lost 11% and 23% respectively during that time, battered by concerns over rising inflation and higher interest rates.

Another factor, HMC said, is the university’s commitment to climate goals.

“A number of institutional investors leaned into the conventional energy sector, through either equities or commodity futures, adding materially to their total return,” Narvekar wrote. “HMC did not participate in these returns given the University’s commitment to tackling the impacts of climate change.”

Energy stocks rose significantly earlier this year as Russia’s war in Ukraine pushed global oil prices to multi-year highs. Even with oil prices falling since then, the S&P 500 energy sector is still up more than 50% this year.

The loss follows a banner year for fund, the largest academic endowment in the world. Its value increased by more than $10 billion to $53.2 billion fiscal year 2021 – the largest in the endowment’s history.

HMC noted the disparity between the returns in fiscal 2021 to 2022, but said it highlights the need to focus on long-term returns.

“We remain confident that the steps we have taken — and those still in process — to construct a portfolio that serves the University’s long-term interests will allow Harvard to maintain and increase its critical support of students, faculty, and research for generations to come,” Narvekar said.

Harvard said the endowment supports nearly every aspect of the University’s work, including financial aid, preservation, as well as funding for both staffing and research. The fund contributed more than $2.1 billion toward the University’s budget in fiscal year 2022 — more than one-third of its annual operating revenue.

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