Abstract

The case examines the investment management strategies adopted by the Harvard Management Company (HMC). HMC managed Harvard University’s endowment funds, the largest in the industry. The case explains the hybrid fund management strategy followed at HMC and how the strategy led to phenomenal growth of Harvard’s endowment funds over the decades. The case describes the investment performance of the endowment fund, asset allocation, portfolio mix and risk management strategies under various fund managers of HMC since its inception. The case also explains the recent problems faced by HMC due to the frequent changes in its leadership and the sub-prime crisis that emerged in the US in late 2007 resulting in significant losses for Harvard’s endowment fund.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Analyze the investment management strategies followed at HMC
• Appreciate the importance of asset allocation and portfolio diversification in investment management
• Study the risk management practices at HMC
• and Understand the pros and cons of hybrid investment management strategy.

Keywords

Harvard Management Company, Funds Management, Portfolio Management, Diversification Strategy, Asset Allocation, University Endowment Funds, Jane Mendillo, Sub-prime Crisis, Neutral Asset Allocation, Hedge Funds, Hybrid Management Strategy, Inflation-indexed Bonds, Beta, Leverage Buyouts, Venture Capital, Walter Cabot, Jack Meyer, Mohammed El-Erian, Foreign Currency Management, Brain Drain, Compensation Issues, Chief Investment Officer, Leveraged Investment Strategy