Harvard is optimizing for a different objective than retail investors or even smaller endowments. It can afford to take less risk and get less return.
Lots of small colleges with 100MM endowments using a passive strategy will fail to survive the next deep recession. They need those returns to survive, so they have no choice but to accept the associated risk. But one deep down market without an associated counter cyclical uptick in enrollment numbers and they are dead. Ask any small private college CFO and they'll agree.
On the other hand, the public markets could lose all their value and Harvard would still be able to cover its operating expenses.
Harvard's goal is to survive for centuries. The goal of a college with a 100MM endowment is to make payroll during the next few school years.
Lots of small colleges with 100MM endowments using a passive strategy will fail to survive the next deep recession. They need those returns to survive, so they have no choice but to accept the associated risk. But one deep down market without an associated counter cyclical uptick in enrollment numbers and they are dead. Ask any small private college CFO and they'll agree.
On the other hand, the public markets could lose all their value and Harvard would still be able to cover its operating expenses.
Harvard's goal is to survive for centuries. The goal of a college with a 100MM endowment is to make payroll during the next few school years.