Thursday, October 8, 2009

News You Can Use

Taking loss in perspective

I write this after having read an article about recent decisions at Harvard. Bloomberg News recently reported that Harvard Management Co., the endowment investment arm of the Ivy League school is in the process of jettisoning a number of their outside investment managers.

It appears Harvard is retrenching after its recent experience in the market. Last year the Harvard endowment lost 27 % of its value, a really huge drop that has serious implications for is current and near term plans.

Over the years, Harvard has been pointed to as an example of how to invest. They bragged a sixfold return from 1990 to 2005. Over the fiscal year ended June 30, their endowment lost $10 billion. Yes, BILLION.

This loss, combined with the very illiquid nature of many of their investments, has put unusual pressure on the university. Expansion projects have been imperiled, cut or halted.

I saw that the average return on our Board Restricted Funds for the Learning Center Fiscal year that ended on August 31,2009 was -7.6%. Negative return (losses, to you and me) are always hard to stomach. Sometimes a little perspective can make one feel better, though. It is a tribute to our investment strategies that we didn't lose more in this economy than we did.

When you consider the plight of our smart peers at Harvard, you can appreciate that our BRFs are pretty well managed.

Read the Bloomberg article here.

JUST IN: (10/9) The New Yort Times, obviously in fear of being scooped by the Idea Hub, just ran a feature on the cutbacks a Harvard. No cookies for Crimson!


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