endowments2

Ivy League Endowment Buys Farms and Forests

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September 22, 2012

Harvard’s endowment, one of the highest performing university endowments, is making direct investment in Brazilian forests, South Africa natural resources, and New Zealand dairy farms, while putting a cap on its PE in the US, according to a lengthy feature in BW this week.

 

Harvard’s investments in natural resources reportedly had gains of 19 percent in 2011, and 13 percent over the past 10 years. But its private equity investment, which produced an annual average return of 24 percent over the past 20 years, has in the past ten years returned 7 percent.

 

In a wider context, endowments and foundations had the “worst returns” of any class of institutional investor, gaining just 0.37 percent for the year through June, according to BW, which cited performance data from Wilshire Associates.

 

The trend has Harvard rewriting its strategy to play on an existing track record in acquiring and selling forests in the US, and will build on that by expanding the approach globally. Not all endowments are decreasing or halting PE investments. Earlier this year it was reported that Harvard sold some of its buyout fund holdings on the secondary market, reducing its PE exposure to 12 percent of the portfolio, but Yale’s exposure is 34 percent, according to a Yale Daily News.

 

And Preqin said earlier this year, as we reported, that over half (58%) of North America-based endowments expect to make their next private equity commitment before the end of 2012 and a further 10% in 2013.

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