This will ripple down to startups. Harvard's endowment, and the similarly invested portfolio of the Ivy League, Stanford, and a few other universities, are some of the major limited partners of venture capital firms. Harvard has already been pulling out of several firms that have not been performing, writing off any possible returns. And many endowment managers have historically followed Harvard's lead.
Considering the DJIA is down 24% on the last four months, this drop sounds about right - assuming they keep some of it in property, bonds, or whatever.
It sucks for them, but a 22% drop in a large fund over the last four months isn't exactly news :-( (which is sad in itself)
"... In a sign of the economic times, Harvard has sent a letter to its deans saying that the university’s $36.9 billion endowment fund lost 22 percent of its value in the last four months and could decline as much as 30 percent ..."
in a world where africans can't have clean water, most american college students gather major debt while going... and colleges are raising tuition 15% a year
- I have a hard time feeling bad for them :?/
(probably a character flaw)
Harvard's endowment is so huge that they use it for everything.
"Harvard depends on its endowment for about 35 percent of its operating budget, and some of its schools rely on endowment income to cover more than 50 percent of their expenses"
Harvard isn't a trust fund. It is a hedge fund. One of the larger ones. The hedge fund has reported 15-20% returns for five years running.
The hedge fund also has a PR arm with a $700 million a year operating budget, whose main objective is continuing to convince the relevant politicians to continue keeping the hedge fund tax-free.
In light of the odd downmod, allow me briefly to elaborate. Universities have very long investment time horizons. This means that their endowments have plenty of time to recover from losses. The same goes for a 30-year-old investor: if you plan to retire at, say, 65, having your 401(k) tank is bad but not a disaster, since you have 35 years to recover. Conversely, when faced with steep losses, institutions less stable than universities (such as most corporations) and older investors (such as those nearing retirement) have much more cause for concern.
Universities typically use some of their endowment to fund current operating expenses. That means that Harvard can lock in some permanent losses in order to do things the way it has in the past few years or it can tighten its budget. Neither are very desirable. They don't want to have to cut back on things like financial aid nor do they want to have to sell at what are extremely low market prices and reduce that endowment more than expected.
