June 12 - Breakingviews columnists discuss the departure of Jane Mendillo, boss of Harvard's $33 billion endowment, and why the Ivy League university's investment performance has been mediocre.
Harvard university's portfolio manager Jane Mondello is stepping down Harvard of course the US educational institution with the largest endowment at about 33 billion dollars. Now over the past six years richer her performance has not been that impressive. Is that right was he -- right as the financial crisis unfold right in the middle Katherine as -- suit. Whatever was in the endowment at that time is probably problem. Right and what it what then happened was of -- -- itself sort of on the back foot badly because it lost and 27%. That you're right typical entitlement even the -- -- the markets don't look -- lost the law but analysts have a mix of assets and typically that would lost about 1819%. Yeah that is over and really go itself on the back foot. And in in rebuilding a team in rebuilding a portfolio allocation analyst stuff. That Damon who has done OK yeah. But no greatly and Austria thus you know it's it's the middle when he thirteen for instance you slightly under -- eleven point 3% return it's just a little bit on the what the typically that amendment well. And she was paid part of that -- to do this job was there. Right I think you mentioned that the strategy was too much you know too much Wall Street pay what what do you mean by then write so well. To me too much pay as. You know she's paid more than most other. Right possibly you'll have a big endowment manages them lately so I'd like hedge fund manager and she's spent a lot for that opened some other people seem to. Managed to you know do about it another factor is this this what Michael Gail model sort of grind. Pioneered by David Swenson who runs the contaminant the public's great rival. It which is in both. Investing because of the load these condemn who have very long term horizon that really that's ever take a little bit -- -- and that -- they wanna use that they were we can invest in illiquid things and and that should should give them more has -- that hasn't shown up and let's them. Rob what -- face you problem I think about it because they have always liked him or things like that. And the promise you -- in the portfolio -- it how to get -- -- -- -- right. And sure. Do you think that there would have been a better strategy I mean jeez sounds like she was stopped with this but it did she move and other stuff that we think the -- you know at least get a little bit better. Promise that he performs. Right -- she tried to change it you know me here for back and yet liquids you know and then just. Very soon. If and how -- a performance and we do we talk about it's not that impressive but sort of in the grand scheme of things you know and the institutions say is this really. About hardware they all kind of stuck in the same boat. The case as well executive search firm that sort of surveyed at twelve taken down so right that that the Ivy League schools and a couple of others that old big ones you know. And that suddenly have a -- AV is which includes the crisis here of course -- -- fight is so that was. Right at the bottom of the twelve over. But the one you know quite the bottom but certainly knows so. Nam and unit saw days can be a problem investing that if you have that kind of -- you should be -- you should also get -- Better investments are that I should kind of of that each -- a little bit. Yeah and it is this sort of the end of the -- model as everybody shifting settlement that we can do all of -- -- -- stuff or is -- still kind of it's been the classic Wall Street and investors where something works well ever thousands of course via -- wouldn't pay because. Typically these these assets to the sports normalize that right they want he'd he'd get these things. And everyone barged into -- -- now that it became -- and now they are buying actually. Yet again for her and me all right thanks rob we're gonna leave it there in the meantime stay tuned for more breaking news tomorrow.