WSJ: Harvard Endowment Makes Big Gain

(Reuters) – Harvard University's endowment fund has made a gain of 7 percent to 9 percent for the fiscal year ended June, boosted by investments in commodities, Treasuries and some strong hedge-fund performers, the Wall Street Journal said on Thursday, citing people familiar with the returns.

The returns were below the endowment's average annual return rate of 15 percent over the previous decade but in a year when the subprime crisis and plunging stock markets caused many institutional investors to post their worst performance in six years those returns still put it at the top of its class, the Journal said.

Harvard, whose investments are closely watched in the asset management industry, had last year said its endowment grew to a new high of $34.9 billion for fiscal year 2007. The endowment is run by Harvard Management Co (HMC).

According to an HMC document, the fund began the fiscal year with 17 percent of its assets invested in commodities, a portion of which was in timber or farmland, the Journal said.

The paper said another Harvard investment that racked up even more profits from the credit crisis was Seth Klarman's Baupost Group, a Boston-based investment firm that rose more than 52 percent last year, in part by buying credit-default swaps, or insurance protection, on residential mortgage-backed securities and corporate bonds.

According to Craig Tome of Chicago's Northern Trust, which collects endowment and pension-fund performance data, Harvard's returns would top any of the nearly 90 endowments and foundations that Northern Trust follows, the Journal said. (Reporting by Tenzin Pema in Bangalore; Editing by Greg Mahlich)