The US’s largest endowment, Harvard Management Company, has undergone monumental changes in the past year. The university’s $37 billion management company spun out its real estate team to Bain Capital, which will manage the 14.5 percent allocation as a separately managed account.

It sold nearly $2 billion-worth of real estate and private equity assets on the secondaries market in 2017. In January, Rich Hall, who headed private equity, left HMC to rejoin the University of Texas Investment Management Company. These are the early results of a significant overhaul by its new chief executive, Narv Narvekar, who joined in November 2016 from the Columbia Investment Management Company.

“They had a big change of strategy,” says a source familiar with the LP. “Narv comes in from Columbia where he wasn’t a big fan of real estate and he very much wanted to do a deal in the first year when he still had support of the board,” he adds, referring to the secondaries sale.

The source notes the nearly $1 billion private equity portion of the secondaries sale was purchased by Lexington Partners and sold for about 85 to 87 cents on the dollar. “When you have a change of the guard, you’re more willing to deal with a deeper discount.”

As for Hall, another source says it was not a surprising move. He is returning to work for an old boss – Britt Harris, who was at The Teacher Retirement System of Texas – and to his native Texas. But the source notes HMC has switched to a generalist investment model in the last year, while Hall is a specialist.

Harvard’s approach had created an over-emphasis on individual asset class benchmarks, Narvekar wrote in September. “Overall, I believe the silo approach did not lead to the best investment thinking for a major endowment.” Under the new model, each member of the investment team takes ownership of the entire portfolio and focuses on the performance of the overall endowment. HMC has also created a new risk allocation framework, seeking to maximise returns, subject to the university’s risk tolerance. Narvekar recruited new senior investment team members, including some from Columbia, and integrated existing team members from the previous model into HMC’s generalist model. He also redesigned the endowment’s compensation framework, which is now based on overall results.

So far it hasn’t paid off.

HMC stood out in fiscal year 2017 ended 30 June by posting the lowest return among all Ivy League endowments for its overall portfolio, for the fourth time in the past six years. Private equity and public equity drove the bulk of the performance, while natural resources draggen on returns. Specific asset class returns were not disclosed.

Harvard will continue to conduct secondaries sales, but it’s unclear whether it is making new investments and forging relationships in private equity, which represents about 20 percent of total assets. A spokesman declined to comment.

Narvekar acknowledged in September that the lack of consistent leadership at HMC over the past few years has complicated efforts to work with external managers. “We are now focused on re-establishing HMC as an investment partner of choice,” he said, acknowledging that this would take time.

If the endowment is pushed out of private equity for a couple of years, this might not be the end of the world, considering the high valuation environment, the strong fundraising market and predicted lower returns for 2017 and 2018 vintages. But a transition that takes too long could be devastating.