- Harvard University will outsource a majority of the management of its $35 billion endowment to independent fund managers, and lay off more than half of its internal fund management staff, the New York Times reports.
- The changes follow two years of leadership flux for the school's funds, which have yielded great turnover in fund manager staffing and leadership of the school's management company.
- The school will also adjust its compensation packages to reflect the performance of its entire portfolio, rather than specific performance in certain funds.
Harvard is in no danger of losing a large portion of its endowment funding to bad investments, but the institution is under pressure to maintain a spot as one of the best-performing endowments among its peer group. This approach should be a lesson for other institutions which may be losing more money than Harvard, and may consider poaching investment talent from firms to bring in as inside management.
Most schools rely on independent firms to guide them on investment strategies, but smaller institutions may want to examine possibilities of having more control and oversight over their portfolios. When the market loses ground, it impacts funds with millions far greater than those with billions, and requires the investing talent to right the course in short order.