FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet, a Nomura company.
Harvard Management Company turns 50 this year.
Since its founding in 1974, “HMC has been tasked with the singular mission to generate strong long-term results to support the educational and research goals of Harvard University,” the endowment says on its website. “This long-term focus has given us an edge in many facets of investment management. We were among the earliest institutional investors in venture capital, one of the first and largest investors in timberland assets, and a leading investor in some of the most successful absolute return and direct investment strategies.”
“Being an early entrant and bringing long-term focus has often allowed us to establish unique investment positions in less crowded areas. As a result, our portfolio has significantly outperformed a typical 60/40 stock/bond portfolio and the average endowment portfolio.”
HMC is the largest U.S. university endowment by a fairly substantial margin, as its $50 billion assets under management tops #2 Yale by about $9 billion.
Why should Traders Magazine care about a bunch of money socked away in some ivory tower?
Of course, we’re being facetious there. As an institutional asset owner, HMC is at the top of the ‘food chain’ of the securities trading business, as it spends lots of money on investment management, brokerage, technology, research and other avenues to generate a return on its billions. The organization also weighs in on regulatory matters, for example with this comment letter to the U.S. Securities and Exchange Commision about public companies’ climate-related disclosures.
As of June 20, 2023, HMC reported an 11% allocation to public equities, 39% to private equity, and 31% to hedge funds. HMC has more than 100 investment partners, which “include both early-stage and established investors, small and large institutions, and incorporate a wide range of mandates—geography, sector, and strategy.”
HMC’s public equity investments have recently skewed toward big tech, with substantial holdings in Alphabet, Meta, and the QQQ ETF.
University endowments such as HMC aren’t the best business partners for brokers and trading-platform operators that prioritize frequent trading activity, or fast money. But as they managing large-scale assets with long-term investment horizons, they are ideal partners from a stability and reputation standpoint. You might call it old money.
In other words, it’s safe to say HMC will still be a presence in the markets 50 years from now.
