Harvard Shifts More Investments to Outside Money Managers

Updated on
  • Fund won’t continue direct equity investment trading strategy
  • Four staffers depart $37.6 billion university endowment fund

Harvard University trimmed staff at its $37.6 billion endowment and will redirect more investments to outside money managers while the fund’s chief executive officer remains on temporary medical leave.

Harvard Management Co. won’t continue a strategy of selective direct equity investments, Bob Ettl, HMC’s interim chief executive officer, said Monday in an internal e-mail reviewed by Bloomberg. That means the endowment will look for external managers across a range of markets and strategies, Ettl wrote.

The moves come while Stephen Blyth, HMC’s CEO, has been on an unspecified leave since May 23, 16 months after embarking on a turnaround plan to improve lackluster returns at the largest fund in higher education.

‘Allocate Capital’

“We continuously evaluate how we can best allocate capital and leverage HMC’s comparative advantages to maximize performance over the long-term,” HMC said in a statement. The management company declined to comment further on the endowment.

QuickTake University Endowments

While endowments typically hire outside money managers, Harvard had a staff investing about a quarter of its assets internally, trading in equities, fixed-income, commodities and other markets, Blyth said in an interview in December with Harvard Magazine. That would be about $9 billion in funds based on a fund with $37 billion in assets. Monday’s memo didn’t disclose the amount of assets affected by the moves.

The internal equity platform will be combined with the fixed income, credit and commodities group to form a public markets platform, with the emerging markets equity team joining that group, Ettl said.

Four Departures

Mike Ryan is departing HMC as head of public markets and absolute return strategies, and the size of the internal equity team will be further reduced, Ettl said in the memo. 

A total of four people left the firm on Monday, according to a person familiar with the matter, who asked not to be identified because the information is private. In May, eight positions in the public equities trading unit were eliminated.

Ettl said in the memo that Rene Canezin, who is head of fixed income, credit and commodities, will take on a broader role to oversee the remainder of the public equities portfolio which includes emerging markets and beta portfolios. Canezin is also the interim head of the natural resources strategy.

Following Blyth’s medical leave, Canezin and Rich Hall, who leads private equity, were named co-chairs of HMC’s investment committee.

New Search

HMC is searching for a new head of absolute return and public market funds, with Elise McDonald, managing director of portfolio strategy, overseeing that group on an interim basis, according to the memo.

Harvard’s endowment produced an annual average investment return of 10.5 percent over the last five years as of June 30, compared with some of its Ivy League rivals, such as Yale University’s average 14 percent.

Ryan joined HMC in July 2014 and was most recently founder and chief investment officer at MDR Capital Management, an investment management firm, according to his bio on HMC’s website. He spent 18 years at Goldman Sachs Group Inc. in various roles in capital markets, fixed income and equities in New York, London, Hong Kong and Tokyo, according to his bio.