Harvard Endowment Soars to $34.9 Billion

Aug. 22, 2007 &#151 -- It is already, by far, the richest university in the world, but Harvard University just increased its lead over the competition even more.

The Harvard endowment grew 23 percent during the fiscal year, which ended June 30, swelling to a new high of $34.9 billion, the Harvard Management Co., which oversees the university's endowment, said yesterday

This growth represents some of the strongest in the history of the university and was spurred by strong performances from investments in emerging markets, private equity and real estate, Mohammad El-Erian, HMC's chief executive, told ABC News.

Harvard's endowment has been hit hard since its fiscal year ended two months ago. In July, it lost about $350 million through investments with Sowood Capital Management, a hedge fund founded by Jeffrey Larson, the former manager of Harvard's foreign stock holdings.

Despite those losses, Harvard's endowment saw a net gain of 0.4 percent last month, said El-Erian, who led the emerging markets portfolio team at Pacific Investment Management Co. before being appointed HMC chief in 2005.

El-Erian said he views this year's gains as a "windfall" that will not necessarily repeat itself next year, particularly with the turmoil in today's market. He said Harvard has responded to these threats by further hedging its risks, investing in a wide diversity of assets.

"We are relatively, defensively positioned, and we manage this on a day-to-day basis," he said. "What served us well this year was that we were in 11 different asset classes and that we were able to navigate some pretty big potholes that occurred in the markets."

Harvard's enormous endowment is unrivaled among other universities. Yale, which has the second-largest endowment, posted a figure of $18 billion last year. Only three other universities — Stanford, the University of Texas and Princeton — posted endowments of more than $10 billion last year, according to the Chronicle of Higher Education.

"This means that Harvard is not only getting richer, but it's giving itself a much bigger distance between itself and the rest of higher education," said Jeff Selingo, assistant managing editor of the Chronicle of Higher Education. "There are very few of them — in fact none — that are anywhere close to Harvard."