Harvard University said it plans to outsource most of the investment management of the university’s $35.7 billion endowment and cut about half of its staff in a sweeping overhaul of the world’s wealthiest university fund.
Harvard Management Co. announced the changes in a letter Wednesday from Nirmal “Narv” Narvekar, the chief executive officer who joined in December from Columbia University’s endowment, charged with improving performance and reviewing strategy.
Harvard Management will shut down its internal hedge funds by June 30, the end of the fiscal year, and about half of the 230 employees will depart by year-end, Narvekar, 54, said in the letter.
Harvard traditionally has employed more people than other endowments because it has traders on staff investing directly in stock and bond markets, as well as teams making direct investments in other assets such as natural resources. Columbia and other universities parcel out their money to different managers specializing in stocks, bonds, hedge funds, private equity or other asset classes.
“We can no longer justify the organizational complexity and resources necessary to support the investing activities of these portfolios,” Narvekar wrote. “Therefore, we have made some important but very difficult decisions.”
Harvard Management said its direct real estate investments are expected to be spun out to become an external manager by the end of the year, while the natural resources portfolio, focused on timber and agriculture investing, will continue to be managed internally.