FYI: These are tough times for university endowments -- there's the difficulty of producing consistent results; the questionable love of investments in hedge funds and private equity amid high fees and underperformance; and the challenge of having to respond to competing constituencies. These issues are not going away anytime soon. If anything, they are becoming more pronounced and complicated in a time of low interest rates and volatile markets.
In that context, this doesn't come as shocking news: Harvard Management Corp., the entity that runs Harvard University's endowment, is considering the sale of part of its private-equity investments.
Regards,
Ted
https://www.bloomberg.com/view/articles/2016-10-17/harvard-s-lesson-in-private-equity
Comments
This is at least the second time around the pitfalls and shortcomings of Ivy League investment programs. They are complex and have access to investment categories not open to most individual investors. Also, excess returns are never a certainty.
About a decade ago David Swensen from the Yale program expressed his serious reservations about their aggressive investment strategies and their transferability to private investors. Here is a Link to a review of his thinking on the matter:
http://www.npr.org/templates/story/story.php?storyId=6203264
His thinking has not changed much since he still recommends simple low cost Index products and long holding periods for private investors. Here is a Link to the popular Lazy Portfolio website that summarizes his portfolio recommendations as well as several others:
http://www.marketwatch.com/lazyportfolio/portfolio/yale-u-portfolio
It seems that the Harvard professionals took a little longer to learn the lessons that Yale learned a decade earlier. Complexity doesn't always generate excess returns. The potential exists, but so does the risk of big time loses. No pain, no gain!
None of this troubles me. Far too many investing options only make decisions more hazardous.
Best Wishes.