Re: Financial topics
Posted: Tue Sep 22, 2015 8:18 pm
Harvard endowment warns of market ‘froth’
Stephen Foley in New York
Harvard is looking for investment managers with expertise as
short-sellers, as the world’s biggest university endowment becomes
more cautious about the outlook for financial markets.
In its latest annual report, which showed investment returns fell to
5.8 per cent in the year to June, the $38bn endowment said its
managers had started to increase cash holdings and feared that some
markets had become “frothy”.
“We are proceeding with caution in several areas of the portfolio,”
Harvard Management Company chief executive Stephen Blyth wrote in the
report.
“We are being particularly discriminating about underwriting and
return assumptions given current valuations.
“In addition, we have renewed focus on identifying public equity
managers with demonstrable investment expertise on both the long and
short sides of the market.”
Mr Blyth, a British-born statistician, was promoted to run the
endowment last year after the resignation of Jane Mendillo, whose
returns failed to keep pace with those at other Ivy League
institutions.
Mr Blyth unveiled an overhaul of Harvard’s asset allocation process
which is likely to be examined widely among other institutions.
Endowments such as those at Harvard, and particularly Yale under its
chief investment officer David Swensen, have been seen as pioneers in
asset allocation and portfolio management theory.
Harvard is ditching its traditional approach of assessing the likely
risk and return of each separate asset class and instead focusing on
five key factors: the outlook for global equities, US Treasuries,
currencies, inflation and high-yield credit.
The result is that Mr Blyth will be sharply scaling back the
university’s holdings of overseas equities, dialling up real estate
and bond investments, and giving himself more flexibility.
He set out a new promise to beat inflation by 5 per cent a year over
10 years.
The 5.8 per cent gain for the Harvard endowment in the year to June 30
compared with 15.4 per cent the previous year, when global equity
markets were rising more sharply.
Its $6bn allocation to hedge funds also held back performance,
returning only 0.1 per cent.
While disappointing hedge fund performance has led some big
institutions, including the California public pension fund Calpers, to
pull out of the sector all together, Harvard is understood to be happy
with its hedge fund portfolio, which outperformed its benchmark in the
five previous years.
The endowment’s real estate portfolio was its top performing asset, up
19.4 per cent last year.
http://www.ft.com/cms/s/0/0cb391ea-6162 ... b37f2.html
Stephen Foley in New York
Harvard is looking for investment managers with expertise as
short-sellers, as the world’s biggest university endowment becomes
more cautious about the outlook for financial markets.
In its latest annual report, which showed investment returns fell to
5.8 per cent in the year to June, the $38bn endowment said its
managers had started to increase cash holdings and feared that some
markets had become “frothy”.
“We are proceeding with caution in several areas of the portfolio,”
Harvard Management Company chief executive Stephen Blyth wrote in the
report.
“We are being particularly discriminating about underwriting and
return assumptions given current valuations.
“In addition, we have renewed focus on identifying public equity
managers with demonstrable investment expertise on both the long and
short sides of the market.”
Mr Blyth, a British-born statistician, was promoted to run the
endowment last year after the resignation of Jane Mendillo, whose
returns failed to keep pace with those at other Ivy League
institutions.
Mr Blyth unveiled an overhaul of Harvard’s asset allocation process
which is likely to be examined widely among other institutions.
Endowments such as those at Harvard, and particularly Yale under its
chief investment officer David Swensen, have been seen as pioneers in
asset allocation and portfolio management theory.
Harvard is ditching its traditional approach of assessing the likely
risk and return of each separate asset class and instead focusing on
five key factors: the outlook for global equities, US Treasuries,
currencies, inflation and high-yield credit.
The result is that Mr Blyth will be sharply scaling back the
university’s holdings of overseas equities, dialling up real estate
and bond investments, and giving himself more flexibility.
He set out a new promise to beat inflation by 5 per cent a year over
10 years.
The 5.8 per cent gain for the Harvard endowment in the year to June 30
compared with 15.4 per cent the previous year, when global equity
markets were rising more sharply.
Its $6bn allocation to hedge funds also held back performance,
returning only 0.1 per cent.
While disappointing hedge fund performance has led some big
institutions, including the California public pension fund Calpers, to
pull out of the sector all together, Harvard is understood to be happy
with its hedge fund portfolio, which outperformed its benchmark in the
five previous years.
The endowment’s real estate portfolio was its top performing asset, up
19.4 per cent last year.
http://www.ft.com/cms/s/0/0cb391ea-6162 ... b37f2.html