The worth of Harvard’s endowment grew to $53.2 billion after the Harvard Administration Firm boasted a 9.6 p.c return on its investments in fiscal 12 months 2024 — the primary 12 months the endowment has elevated in worth since 2021.
The HMC’s sturdy funding returns — that are considerably greater than final 12 months’s 2.9 p.c returns — allowed the worth of the endowment to extend by $2.5 billion from fiscal 12 months 2023, the College introduced on Thursday in its annual monetary report.
The expansion comes whilst Harvard has contended with a major drop in endowment items amid the continuing backlash to the College’s dealing with of campus antisemitism.
This enhance within the endowment worth comes after two consecutive years of endowment drops, falling to $50.9 billion in FY 2022 and $50.7 billion in FY 2023. This reversal represents a return to the upward pattern in Harvard’s endowment worth over the previous twenty years.
HMC CEO N.P. “Narv” Narvekar wrote within the monetary report that Harvard’s endowed funds has a goal return of 8 p.c, and the annualized return of 9.3 p.c averaged over the previous seven years has “greater than saved tempo” with that concentrate on.
Although some critics have mentioned Harvard’s endowment has underperformed in recent times, with an funding return of 9.6 p.c this 12 months, Harvard is third solely to Brown and Columbia amongst its Ivy League+ friends, which delivered 11.3 p.c and 11.5 p.c returns, respectively.
Endowment distributions in fiscal 12 months 2024 totaled $2.4 billion — 37 p.c of the College’s annual income — with funds going towards prices comparable to monetary assist, school, analysis initiatives, and extra. The contributions have allowed the College to commit $749 million in monetary assist throughout the College, with $250 million supplied to undergraduates, based on the report.
The biggest allocations inside Harvard’s endowment are to non-public fairness and hedge funds, with non-public fairness accounting for 39 p.c of the portfolio and hedge funds accounting for 32 p.c.
Harvard solely allocates 14 p.c of its endowment in direction of public equities as a result of its decrease threat tolerance. Fiscal 12 months 2024 was a robust 12 months for public equities — with the S&P 500 typically setting new file highs — however the HMC nonetheless delivered sturdy returns given its decrease publicity to public equities.
“In FY24, public fairness and hedge fund portfolios stood out for his or her sturdy efficiency,” Narvekar wrote within the report. “It is a significantly optimistic indicator, since HMC’s hedge fund portfolio has much less fairness publicity than most hedge fund indices, but nonetheless outperformed throughout a robust 12 months for equities.”
Harvard additionally decreased the endowment’s publicity to actual property and pure assets from 25 p.c in 2018, to only 6 p.c in FY 2024. This discount has helped drive a optimistic affect on the endowment returns, based on Narvekar.
The College noticed a funds surplus of $45 million in 2024, a major change in comparison with the excess of $186 million that Harvard operated with in FY 2023. Income development of 6 p.c was outpaced by the expense development of 9 p.c.
Vice President and Chief Monetary Officer Ritu Kalra attributed the rise in bills to HMC investing in its folks.
“Our dedication to attracting and retaining high expertise by aggressive salaries accounted for simply over half of the rise in compensation,” Kalra wrote.
Harvard President Alan M. Garber ’76 acknowledged the challenges going through the College in a message printed within the annual report.
“The work forward calls for a lot of every of us,” Garber wrote. “Luckily, we’re folks supported by beneficiant bodily and monetary assets whose ambitions are restricted solely by our imaginations.”
“Our College will emerge stronger from this time — not despite being examined, however due to it,” he added.
Notably, endowment items to the College dropped from $561 million in FY 2023 to $368 million this 12 months.
Within the report, Narvekar famous the College’s growing dependence on endowment distributions to fund its operations.
Twenty years in the past, endowment distributions accounted for 21 p.c of the College’s funds. Now, it accounts for nearly 40 p.c.
“The ever-increasing reliance on this crucial useful resource makes our work all of the extra vital,” Narvekar wrote.
—Employees author Sidney Ok. Lee could be reached at sidney.lee@thecrimson.com. Observe her on Twitter @sidneyklee.
—Employees author Thomas J. Mete could be reached at thomas.mete@thecrimson.com. Observe him on Twitter @thomasjmete.
