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"2. Hedge funds exist (ostensibly anyway) to provide a return to their investors. Harvard does not exist to provide a financial return to its investors." From

by sho 17y ago

"2. Hedge funds exist (ostensibly anyway) to provide a return to their investors. Harvard does not exist to provide a financial return to its investors." From the article: "According to the university's 2008 financial report, in the next 10 years it must pay various private investors some $11 billion in capital commitments." I agree with patio11. What kind of "endowment" has investors!? Multi-billion dollar interest rate bets with banks? Borrowing money to bet more? Of course the managers should try to find a decent return on their endowment, but at some point the tail has started wagging the dog here. In a previous article it was mentioned that some of the money managers were being paid bonuses of tens of millions a year; probably a hundred times the highest-paid professor. How you can have crap like that going on and still pretend it's all about the education is beyond me.

ryanwaggoner 17y ago
Unless I'm completely mistaken, the capital commitments refers to investments the Harvard endowment is making in other funds, not investments being made in its own fund. For example, when a VC firm raises a new fund, they don't take delivery of the entire amount of the fund, they just get commitments that the funds will be available from investors (like Harvard, in this case) when needed. It's not unreasonable for an endowment fund with tens of billions of dollars to commit roughly $1.1 billion per year to various investments over the coming decade. As far as paying bonuses of tens of millions of dollars to the managers of the endowment, Harvard has to compete for qualified managers, too. If they offered $250k or whatever the professors get paid, it's doubtful that they'd get any qualified applicants. (And yes, I'm aware that the guy they hired apparently wasn't qualified either, but that's not the point.)
- sho 17y ago
  Well, I'm not privy to the Harvard accounts, so you're probably right on that front. Yeah, probably signed up to some deferred payment thing. Well done. But the other part - the $40m bonus payments (a figure from another article) - that is obscene. Doubly so for a so-called educational institution. Yeah, capitalism, blah blah. Yeah, market rates, etc. Yeah they "made their money back" etc. Fuck all of that. Paying someone, anyone, $40m a year is obscene. Seriously - step back for a minute and think about it. Harvard uni. Pays their top professor $250k. Pays their money managers $20m+. What does that say? I'm not going to answer, fill in your own; but it says something, all right.

by sho 17y ago

ryanwaggoner 17y ago

Unless I'm completely mistaken, the capital commitments refers to investments the Harvard endowment is making in other funds, not investments being made in its own fund. For example, when a VC firm raises a new fund, they don't take delivery of the entire amount of the fund, they just get commitments that the funds will be available from investors (like Harvard, in this case) when needed. It's not unreasonable for an endowment fund with tens of billions of dollars to commit roughly $1.1 billion per year to various investments over the coming decade. As far as paying bonuses of tens of millions of dollars to the managers of the endowment, Harvard has to compete for qualified managers, too. If they offered $250k or whatever the professors get paid, it's doubtful that they'd get any qualified applicants. (And yes, I'm aware that the guy they hired apparently wasn't qualified either, but that's not the point.)

sho 17y ago
Well, I'm not privy to the Harvard accounts, so you're probably right on that front. Yeah, probably signed up to some deferred payment thing. Well done. But the other part - the $40m bonus payments (a figure from another article) - that is obscene. Doubly so for a so-called educational institution. Yeah, capitalism, blah blah. Yeah, market rates, etc. Yeah they "made their money back" etc. Fuck all of that. Paying someone, anyone, $40m a year is obscene. Seriously - step back for a minute and think about it. Harvard uni. Pays their top professor $250k. Pays their money managers $20m+. What does that say? I'm not going to answer, fill in your own; but it says something, all right.