This story originally ran in the spring 2025 issue of the Harvard Gift Planning newsletter.
Before taking the helm of Harvard Management Company (HMC) and the University’s endowment portfolio in December of 2016, N.P. “Narv” Narvekar led Columbia University’s investment office for 14 years and twice posted the highest 10-year return among all endowments over $1 billion.
2017 marked the beginning of significant changes at HMC. Over the next four years, both the organization’s structure and the way in which investments were made received an overhaul. By the end of 2020, HMC reduced its staffing needs by helping internal investment teams launch independent investment firms, moved from a siloed approach to a generalist model of investing, and shifted a much larger share of the portfolio to external managers.
After fiscal year 2024 returns were reported this past fall, it is becoming clear that these changes are having the intended effect. The endowment’s three-year return is among the top performers of major higher education peers.
Harvard Gift Planning recently spoke with Narvekar to get his reflections on the state of the Harvard endowment and HMC. Narvekar’s responses have been edited for length and clarity.
Can you briefly share a high-level update on the health of the Harvard endowment?
In short, the endowment is in a strong position. Of course, there is always more work to do, but that’s not unique to HMC, and we maintain close communication with our colleagues at the University to ensure we always have a clear understanding of Harvard’s annual financial needs. After all, while the endowment is a perpetual source of funding, it still needs the liquidity to support what has grown to account for nearly 40 percent of the annual operating budget. Last year alone that equaled roughly $2.4 billion.
Do you still view HMC or the portfolio as being in a stage of transition? What is HMC’s current focus?
At this point, the organizational restructuring is long behind us and, fortunately, was completed well ahead of schedule. Repositioning the portfolio is also largely behind us. It takes longer to implement, but the primary shifts involved increasing the endowments private equity exposure, in particular venture capital; increasing hedge fund investments with a focus on uncorrelated strategies; and dramatically reducing the allocation to real estate and natural resources.
I am privileged to work with such an accomplished and committed team. They took on the challenge of the transition and made it a success. Harvard is fortunate to have such a strong group.
HMC continues to be focused upon all aspects of investment and manager selection, as well as upon engaging with the University to determine its risk tolerance.
Which areas are the biggest factors in performance?
Investment alpha [returns beyond an investment’s benchmark] and portfolio risk level are the two largest factors in performance. Over the last seven fiscal years, HMC’s alpha generation has been exceptionally strong. Honestly, it’s exceeded even our own expectations, and I’d caution that this level of outperformance is probably unsustainable year-after-year. That said, the strong alpha has allowed Harvard to keep pace with its peers even while taking less risk than most of them.
Lower portfolio risk is a restraint on performance during normal market condition—and is particularly constraining in ebullient markets like we’ve experienced during the last seven years. We should note, however, that it can be helpful during a sustained market downturn. The University determines its risk tolerance based on its unique financial position, as well as current and future needs. Every university will have a different view on what amount of risk best suits their needs, which is one reason why comparing endowment returns as apples-to-apples is inherently misleading.
Within HMC’s portfolio risk level, reducing exposure to real estate and natural resources, while increasing private equity and uncorrelated hedge funds, has definitely contributed meaningfully to performance.
How do you view endowment investing compared to individuals managing their own long-term assets?
There aren’t too many similarities between the two, but I’d say risk is the common thread across any investing. The further you are from retirement, the more risk you can afford to take to see better long-term growth. The closer you get to retirement, that risk appetite naturally decreases as stability and reliance become more urgent.
Harvard falls somewhere in between those two. It seeks to find the right balance between today’s needs and planning for the generations of scholars yet to come—a balance we are constantly striving to get right.
To learn more about how you can reach your financial goals through philanthropic gift planning, please visit the Harvard Gift Planning webpage.