Harvard’s Investment Report Card

Harvard’s endowment had a great year, but not as great as others did.Credit…Charles Krupa/Associated Press

High grades for college endowments

University endowment managers, long criticized for the fees they pay out to private equity firms and hedge funds, have something to show for it: eye-popping returns. Yesterday, M.I.T. reported that its endowment had gained 56 percent in its most recent fiscal year, which ended in June. Yale also published its latest returns yesterday, with its endowment up 40 percent over the same period, its third-highest annual return since 1970. Dartmouth posted a return of nearly 47 percent. Duke reported a 56 percent return.

Harvard, which runs the biggest endowment (worth $53 billion), said yesterday that its fiscal-year return lagged many of its rivals, rising a mere 34 percent. Harvard’s endowment manager said this “tremendous” return nonetheless reflected “the opportunity cost of taking lower risk” than many of the school’s peers.

A big reason for the gains is investments with private equity firms, which in some years have received more in fees than endowments have paid out in tuition help. Harvard’s private equity investments, worth a third of its total portfolio, returned 77 percent in its latest fiscal year. Venture capital funds are also recording huge returns: The University of North Carolina logged a 142 percent return from that portion of its $10 billion endowment.

Are these returns worth the risk? Many endowments, like Harvard’s, have increased their allocations to private equity, venture capital and hedge funds in recent years, saying that this provides crucial diversification from broader stock and bond market trends. These “alternative” investments can result in outsize returns, subject to hefty fees, but can be less predictable than more conservative choices. The S&P 500 was up about 40 percent in the year to June, putting endowments’ returns in perspective. Even with U.N.C.’s venture capital gains, its total endowment was up 42 percent. Yale’s fund had nearly 40 percent of its portfolio in private equity funds, and matched the return of a diversified index fund.

High returns also complicate the debate about big endowments’ tax status. One of the few tax increases that President Donald Trump pushed through was a 1.4 percent levy on the largest university endowments’ investment income. Facing lobbying by the affected institutions, Democrats have discussed reducing the tax as part of the spending bills slowly working their way through Congress. The bumper returns that many schools just reported could make that harder to justify.


It’s the first day of Italy’s sweeping vaccine mandate. All workers across public and private sectors are now required to show proof of vaccination against the coronavirus or they will be put on unpaid leave. Lines formed outside the country’s office buildings, and officials braced for protests. Follow The Times’s live, on-the-ground updates as the first-of-its-kind mandate for a Western democracy comes into force.

An F.D.A. panel recommends a Moderna booster. Advisers voted unanimously in favor of approving a half-dose booster of the coronavirus vaccine. Those eligible for the extra shot include people over 65 and other adults considered at high risk, the same groups now eligible for a Pfizer-BioNTech booster.

Boeing is in more trouble. A former Boeing pilot accused of deceiving the F.A.A. was indicted by a federal grand jury for statements he made about the 737 Max jet, the plane involved in two crashes in which 346 people were killed. Separately, the company is dealing with a new type of defect on its 787 Dreamliner.

LinkedIn is shutting down its social networking service in China. The Microsoft-owned site cited “a significantly more challenging operating environment and greater compliance requirements” in making the move. It was one of the last foreign social networking sites operating in the country — Twitter and Facebook have been blocked for years, and Google left more than a decade ago — and will instead offer users in China a new app focused solely on job postings.

Netflix faces outside criticism and internal unrest. The comedian Dave Chappelle’s special, “The Closer,” was called transphobic by several organizations, including GLAAD. It has thrust Netflix into difficult cultural debates, the kind usually focused on Facebook and Google, which are playing out in heated internal discussions as employees accuse the streaming giant’s executives of facilitating the spread of hate speech.

Banks report sunny earnings, but clouds loom

The nation’s largest banks this week reported bumper earnings for the third quarter, propelling the stock market higher. Profits at Bank of America, Citigroup, JPMorgan Chase, Morgan Stanley and Wells Fargo rose by more than 50 percent, on average. (Goldman Sachs reports later today.) Driving the banks’ earnings increase was a flurry of fee-generating deal-making activity, but other parts of their businesses, like trading and lending, were down.

Those six banks hold more than 40 percent of all assets in the sector, which means that their fortunes can provide a pretty good weather vane for the economy in general. Here’s the forecast:

Partly sunny with unseasonably high temperatures: Deal-making was strong, with M.&A. fees hitting record highs, a sign that executives are optimistic about the future. Consumers are also opening their wallets, with credit card spending up more than 20 percent in the third quarter, versus a year ago, at Bank of America, Citi and JPMorgan. “If you look at the economy, it’s improving, people are spending more and businesses are going to have to start investing,” Paul Donofrio, Bank of America’s C.F.O., said yesterday.

Late thunderstorms possible: Trading revenue fell at JPMorgan and Citigroup and rose slightly at Morgan Stanley, reflecting the recent turmoil in markets. What’s more, a good portion of the banks’ earnings in the latest quarter came from tapping rainy-day funds. Bank of America, Citi, JPMorgan and Wells Fargo pulled a collective $6 billion out of accounts meant to cover future loan losses. And loan growth overall was again disappointing. If higher spending shows optimism for today, a lack of lending may be a sign that consumers and businesses still see clouds on the horizon.

Seen and heard

“We need some of the world’s greatest brains and minds fixed on trying to repair this planet, not trying to find the next place to go and live.”

— Prince William, taking aim at billionaires spending their money on going to space rather than on fighting climate change on Earth.

“The state companies are going their own way. They don’t care about the political pressure worldwide to control emissions.”

— René Ortiz, a former OPEC secretary general and a former energy minister in Ecuador, on how government-owned energy companies are increasing production as U.S. and European companies pare supply because of climate concerns.

“It’s a racecar slowing down ahead of a turn, but it’s still going faster than we ever have in our lives.”

— Igor Popov, the chief economist at Apartment List, on the rapid rise in rent prices, which is stoking inflation and putting pressure on policymakers to react.

In the papers

Some of the academic research that caught our eye this week, summarized in one sentence:

  • There are two broad views about why people stay poor, and only one is backed by research. (Clare Balboni et al.)

  • Work requirements for social safety net programs do more to remove people from benefits than to bolster employment. (Colin Gray et al.)

  • Among billionaires, the ultrarich aren’t considered better looking than the merely very wealthy. (Daniel Hamermesh and Andrew Leigh)

  • A reduction in working hours is linked to a rise in weight among some workers. (Joan Costa-Font and Belen Saenz de Miera Juarez)

  • Violent crime increases on days with higher air pollution. (Evan Herrnstadt et al.)

Crypto players mobilize in D.C.

Coinbase, the cryptocurrency exchange, started a high-profile public policy campaign yesterday, posting its blueprint for crypto regulations on GitHub, which mainly serves as an open-source software code library, for public comment. “Our purpose in publishing this proposal was to contribute to a broad conversation and to do so openly and democratically,” a Coinbase spokeswoman told DealBook.

Federal agencies are racing to address the potential risks in the fast-growing crypto industry, and a burgeoning lobby has emerged to influence the shape of regulations.

Coinbase is flipping the script. Traditionally, lawmakers and regulators solicit comments from the public when considering new rules and regulations. But Coinbase appears to be losing patience, feuding publicly last month on Twitter with the S.E.C. over a proposed crypto product and now subtly co-opting the government’s role as representative of the people.

But old-fashioned lobbying is still important. Although Coinbase did not submit its proposal to the Senate Banking Committee, which recently requested input on crypto regulations, it met with staff at 30 congressional offices and engaged directly with at least 20 members of Congress before publishing it, the company told reporters. It also “reached out” to the S.E.C., it said.

Crypto advocates are flooding the zone. The venture capital firm Andreessen Horowitz, an early Coinbase investor, submitted its thoughts to the banking panel, and representatives have been making the rounds in Washington this week to advance the firm’s views. Katie Haun, a former federal prosecutor who co-leads Andreessen’s crypto fund, was also in town.

“Crypto knows how to get through to members,” Kristin Smith of the Blockchain Association told lawyers this week at a D.C. Bar Association event. The industry’s ability to engage with Congress and encourage enthusiasts to press its policy views is unique, she said. Crypto now has “more of a voice and a seat at the table,” she added. Mobilizing crypto Twitter — a “highly communicative community” — is the industry’s “special tool,” she said.



  • The activist investor Jana Partners has taken a stake in Macy’s and is pushing for the retailer to spin off its e-commerce business. (WSJ)

  • LeBron James’s SpringHill entertainment group sold a minority stake to four investors — Gerry Cardinale’s RedBird Capital, Fenway Sports Group, Nike and Epic Games — at a $725 million valuation. (NYT)

  • Shares in the software provider GitLab jumped 35 percent on its first day of trading, raising its valuation to almost $15 billion. (CNBC)


  • China’s central bank said that the risks to the country’s financial system from Evergrande’s crisis were “controllable.” (Reuters)

  • Plant-based food companies aren’t transparent enough about their emissions to tell whether their foods are more sustainable than meat, some analysts say. (NYT)

  • “Shareholder Democracy Is Getting Bigger Trial Runs” (NYT)

  • YouTube’s stricter policy against election misinformation led to a drop in misleading videos on Facebook and Twitter, too. (NYT)

  • Cybersecurity experts said that plans by Apple and the E.U. to monitor phones for illicit material were ineffective and dangerous. (NYT)

Best of the rest

  • The real reasons driving the energy crunch in Britain and the rest of Europe. (NYT)

  • “Your Black Friday Bargain Is Stuck Somewhere in the Pacific.” (Bloomberg Opinion)

  • The U.S. is missing about 4.3 million workers. Where did they go? (WSJ)

  • A shorter workweek trial in Iceland was an “overwhelming success,” researchers say. (Bloomberg)

  • “The Unvaccinated May Not Be Who You Think” (Times Opinion)

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