Harvard's private equity drives overall returns

The $32bn endowment – one of the private equity industry’s most influential LPs – saw its private equity holdings outperform every asset class other than public equities for the 12-month period ending 30 June.

Harvard’s $32 billion endowment beat its overall performance benchmark for the 12-month period ending 30 June, thanks in part to a particularly strong return from its private equity holdings.

The asset class returned 26.2 percent for the fiscal year, beating the performance for every other asset class except public equities, which returned 28.3 percent. The return for private equity, however, was still slightly less than the benchmark set for the asset class, which was approximately 29 percent.

In FY 2010, the endowment's private equity portfolio returned 16.2 percent.

Harvard’s private equity investments have generated an annualised 20-year return of approximately 23 percent, beating all other asset classes by at least 10 percentage points. The annualised return over the past ten years, however, was approximately 6.5 percent, below that of all other asset classes.

Harvard published its fiscal 2011 performance report this week, which showed the endowment enjoyed a total investment return of 21.4 percent for the fiscal year, compared to a return of 11 percent in fiscal 2010.

“Even with the extreme volatility that has gripped financial markets in the months since our fiscal year closed, we are confident that our portfolio, while impacted by adverse markets, is well positioned to support Harvard’s mission,” Jane Mendillo, president and chief executive officer of the Harvard Management Company, said in the report.

A spokesperson for the endowment was not available for comment at press time.