BOSTON (Reuters) – Harvard University is sending pink slips to about one-quarter of its investment management staff after the school’s endowment shrank by about 22 percent and its president said cost cuts would follow.
Harvard Management Co (HMC), which oversees the Ivy League school’s multibillion dollar endowment, began laying off employees this week. HMC is expected to slash about 25 percent of its staff, or 50 jobs, in the next several months, said John Longbrake, a spokesman for the university.
“Targeted reductions will occur throughout the HMC and will include some investment professionals, as well as ‘back office’ and other support personnel — operations, IT, human resources, and legal,” Longbrake said in a statement on Friday.
The news comes about two months after Harvard, the world’s richest university, shocked the investment community with news that its endowment had shrunk to about $29 billion after having lost about $8 billion in the first four months of the fiscal year that began in July.
Harvard had delivered an average annualized investment return of 13.8 percent over the last decade, far better than most universities, and its investment choices were closely watched in the industry.
Citing “severe turmoil” in the world’s financial markets, Harvard President Drew Faust warned in December that losses could climb even further, leaving Harvard on track to deliver its worst annual returns in 40 years.
The school, located in Cambridge across the Charles River from Boston, relies on its endowment to cover about 35 percent of its operating budget. Faust warned the school and alumni that cost cuts were inevitable.
Harvard Management Co joins a string of prominent money management firms, including Fidelity Investments and State Street Corp (STT.N), that have announced job cuts as assets under management shriveled. (Reporting by Svea Herbst-Bayliss; editing by Jeffrey Benkoe)