Wednesday, March 13, 2013

Harvard Endowment Needs Cash

Yesterday I learned an interesting fact. Some 70% of the operating budget for Harvard is funded from its various endowments.

This puts a lot of pressure on those endowments to constantly be generating a consistent stream of earnings through its investments. How well does the current portfolio design paradigm of opportunistically buying and selling stocks, bonds, alternatives to stocks and bonds and other instruments derived from stocks, bonds and alternatives, fit this need for constant income?

Experience has the answer. Not so well.

Harvard is not unique in this. The current portfolio design paradigm will not serve.

They need a new one.

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