Wall Street Folly

Harvard's El-Erian lowers bond & indexing allocations

Facing its lowest investment returns in three years with a 16.7% gain, Harvard's endowment, at $29.2 billion -- the worlds largest -- has trimmed its target allocation to bonds to 13%, and cut index-tracking investments to 30% according to its manager, Mohamed El-Erian.   In addition, he plans to increase investments overseas in private equity, real estate and commodities.  And if you need a job, he'll be hiring.  He's already hired Karen Parker Feld of Wellington Management to head a new foreign exchange unit, Marc Seidner of Standish Mellon Asset Management to head U.S. bond investing, and Kathryn Murtagh of Goodwin Proctor LLP as chief compliance officer.  He plans to hire an additional 15 to 25 people:

El-Erian, 48, says he's not going to let Harvard become overly reliant on a single team or strategy again. He has cut the fund's traditional dependence on bonds, shifting more assets to buyout funds and non-U.S. markets. He also hired five senior managers from Stanford, Deutsche Bank AG and elsewhere to replenish Harvard's in-house talent.

``We needed to be retooling, irrespective of whether we had gone through a transition,'' El-Erian said in an interview in his office in the Boston Federal Reserve Building, overlooking the harbor. Building management depth means Harvard should ``not have to go through such a transition again,'' he said.

Heirs of Princeton donors want the donation back -- 45 years later

You'd think that after 45 years it's a little late for a refund.  But the heirs of Charles and Marie Robertson, who made one of the largest university donations in history in 1961 -- $35 million to Princeton -- are going to court seeking return of the funds:

The money was supposed to help the Woodrow Wilson School of Public and International Affairs turn out U.S. government spies and diplomats.

But heirs of the Robertsons say the school hasn't turned out enough government agents.

They sued in 2002 and are demanding the money back, now worth more than $750 million, thanks to investments and endowments. Arguments scheduled this week are largely technical and have to do with motions filed in the case. Any trial would be months -- possibly years -- away.

Family Asks For Return Of College Donation - AP via WXPI

Duke endowment chief ducking out to start his own firm

Following the leads of Harvard's Jack Meyer and Stanford's Michael McCaffrey, Thruston Morton, Duke University Management Co's investment manager is quitting at the end of the year to start his own firm.

Neal Triplett, an investment manager who's overseen Duke's hedge-fund portfolio for six years, will replace Morton, the Durham, North Carolina, school said in a statement today. Morton, 51, has headed the university-affiliated company since 2000.

Dumac, as the company is known, manages $7.5 billion in assets, including Duke's endowment and employee pensions. The $4.5 billion endowment gained 20.2 percent in the year ended June 30, the best among large higher-education funds except for those at the Massachusetts Institute of Technology and Yale University.

Duke Endowment Chief Morton to Leave, Form Own - Bloomberg

MIT endowment return bests Harvard and Yale

First Harvard's $29.2 billion endowment reported fiscal 2006 returns of 16.7%.  Then Yale upped the ante, by reporting that their $18 billion endowment was up 22.9%.  And now MIT is reporting their results:  up 23% vs 17.6% last year.

MIT, better known for scoring breakthroughs in science than for turning out money managers, delivered out-sized returns with bets on real estate, private equity and international stocks that swelled the endowment to $8.4 billion, the school said. A year ago the endowment was $6.7 billion.

Yale bests Harvard in endowment gain

Yale's $18 billion endowment, the second largest for a university, posted a 22.9% investment return beating Harvard's 16.7% reported last week.

The advance, coupled with contributions, added $2.8 billion to the world's second-richest university fund, Yale said today in a statement. Yale investment chief David Swensen topped the 16.7 percent rise by the wealthiest school, Harvard, whose $29.2 billion endowment is managed by Mohamed El-Erian.

Besides Harvard, Swensen, 52, outpaced the Standard & Poor's 500 Index, a benchmark for domestic stocks that returned 8.6 percent in the fiscal year ended June 30, and the average 11.6 percent return of U.S. foundations and endowments with more than $1 billion in assets. He was one of the first university money managers to diversify beyond stocks and bonds and bet heavily on hedge funds, real estate and private equity.

Harvard endowment tweaks its asset-mix

Harvard's endowment now has a  more foreign flavor.  Mohamed El-Erian, the $29 billion fund's manager has shifted the asset mix, increasing its exposure to international equities and emerging markets.  Also a bigger part of the mix:  "real assets", including commodities.  Fixed income exposure has been reduced.

Echoing Steve Cohen at SAC Capital, El-Erian is finding it harder and harder to find investments that produce big returns as competitors crowd in:

"The minute something becomes demonstrable, everybody will chase it and it will lose its value," he said. "The traditional sources of value are eroding as everyone seeks to take the same approach."

Yale's CIO Dave Swensen's annual report becoming the new must read

The Oracle of New Haven?  Somehow it doesn't have the same ring as the "Oracle of Omaha", but now that Warren Buffett is getting up there in years, it seems that Yale CIO Dave Swensen's annual report is becoming the new 'must read' for professional investors...

Harvard's El-Erian: Emerging market debt rally may be on last legs

Mohamed El-Erian, who took the reins at Harvard's endowment last January from running the world's largest emerging market fund at PIMCO, said that the emerging market debt rally might be stalling out with the easy money already made....

Yale divorcing one of its money managers

Yale is letting no moss grow under its ivy.  Worrying that its $500 million investment had grown too large, the huge ivy league endowment is pulling the plug on its relationship with the Children's Investment Fund Management LLP. Started in January 2004 by former Perry Capital manager Christopher Hohn, the fund had more than doubled its investors' returns since then.....