Harvard Management Company to Lay Off Half Its Staff

Jan 26, 2017 by

Harvard Management Company will lay off approximately half of its 230-person staff by the end of the calendar year in the genesis of a five-year overhaul of the world’s largest university endowment.

In a message to Harvard affiliates Wednesday, N.P Narvekar—HMC’s newly-installed CEO—outlined his plan to revitalize the University’s underperforming investment arm, announcing that the company would move to eliminate its internally-managed hedge fund teams by the end of fiscal year 2017, among other reforms.

“We can no longer justify the organizational complexity and resources necessary to support the investing activities of these portfolios,” Narvekar wrote. “Therefore, we have made some important but very difficult decisions.”

Narvekar’s announcement comes as HMC attempts to improve its investment performance—which has lagged behind that of its peers in the last few years—and represents a monumental shift in the way the University invests its 35.7 billion endowment.

The University has historically employed a unique “hybrid” investment model, in which HMC retains a large internal staff in addition to hiring outside money managers. But in a stark shift, Narvekar has moved to abandon HMC’s investment model and instead mirror investment practices in place at many other universities.

Beyond laying off more than 100 employees, Narvekar will also direct HMC to approach a broader investment strategy. In his letter, he wrote that HMC will ease its strategy of “silo investing,” in which its employees specialize in various asset classes, and move to a more “generalist” model focusing efforts on overall endowment performance.

Narvekar, who formerly managed Columbia University’s endowment, was hired in September 2016 to succeed Stephen Blyth, who resigned in the summer after taking a medical leave of absence and has since returned to teaching.

He was expected to make significant changes to the way Harvard invests its endowment; University President Drew G. Faust said in September 2016 that the next endowment chief would reconsider the endowment’s investment strategies, and several experts recommended Harvard eliminate its idiosyncratic model.

But less than two months into his tenure as the chief executive at the top of Harvard’s endowment, Narvekar has quickly started to spur a radical change in Harvard’s investment strategy—a choice experts say will push HMC in the direction of more successful investment offices.

Source: Harvard Management Company to Lay Off Half Its Staff | News | The Harvard Crimson

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