Harvard endowment CEO resigns amid ongoing turnaround

Stephen Blyth had sought to improve returns at the fund, which invested about one-sixth of its portfolio in private equity as of September 2015.

Stephen Blyth, president and chief executive of Harvard Management, the company managing Harvard University's $37.6 billion endowment, has resigned for personal reasons effective immediately, HMC said in a statement.

Blyth assumed his role at HMC 17 months ago, on 1 January 2015, succeeding Jane Mendillo. He had been on a temporary medical leave of absence since May 23, the university said at the time. Following Blyth's resignation, HMC has lost four chief executives in the past ten years.

Harvard University has the biggest endowment in higher education, according to data from PEI; fellow Ivy League school and arch-rival Yale is third-largest, at $25.6 billion. During his brief tenure as CEO, Blyth worked to improve the fund's investment performance. Harvard's returns have lagged behind its peers: in 2015 it announced a return of 5.8 percent, about half Yale's return of 11.5 percent, while Harvard's local rival MIT surpassed both schools with a return of 13.2 percent for its $13.5 billion endowment, Harvard Magazine reported in September 2015.

As part of his turnaround efforts, Blyth adjusted HMC's asset allocation approach to make it more flexible . HMC established wide ranges for the amount of investment allocated to each type of asset class, for example, setting the range for private equity at between 13 percent and 23 percent, and between 11 percent and 21 percent for assets delivering absolute returns.

In 2015, about 16.7 percent of Harvard's endowment was allocated to private equity, according to Harvard Magazine ( Yale 's is 16.2 percent, while MIT says that its portfolio is “heavily weighted toward…private equity, real estate, and real assets”). The private equity portfolio, led by Rich Hall, a 1990 graduate of Harvard, returned 11.8 percent, driven by the performance of its venture capital investments, HMC said in its 2015 annual report.

In an interview with Harvard Magazine in December, Blyth said that HMC's relationships with fund managers are “incredibly valuable”.

Those relationships are “assets that need to be managed and looked after in the same way we would look after financial assets”, Blyth told Harvard Magazine in an interview in December. He highlighted private equity fund manager relationships as an area of focus, noting that frequent CEO turnover, which has happened six times at HMC since 2005, isn't ideal for relationship-building.

HMC said in its statement that Robert Ettl, HMC's chief operating officer, will continue to serve as interim CEO. Ettl assumed the interim position at the time when Blyth went on medical leave.

The search for Blyth's replacement is proceeding with help from David Barrett Partners, HMC said. During this interim period, HMC head of public markets and natural resources René Canezin and head of private equity Richard Hall will continue to co-chair the endowment's investment committee.

Blyth joined HMC in 2006 and held roles as head of internal management and head of public markets before becoming president and CEO on 1 January 2015, according to the HMC website. He is also a professor of the practice of statistics at Harvard.

In a statement, Blyth said he would return to teaching as he looks forward to his “next chapter”.

Before joining HMC, Blyth had been managing director and head of the global rates proprietary trading group at Deutsche Bank in London, and managing director in the derivative products group at Morgan Stanley in New York, the HMC website said.

According to PEI data, HMC has invested in funds such as ChrysCapital VI, Investindustrial Fund VI, Berkshire Fund VIII and Greylock XIII.