Returning rate of 27.1% in past year
Thanks to steady VC and hedge funds high returns
SpaceX stock alone holds $2.2 billion
Research fund cuts and tax hikes are ‘difficult’
The Harvard University Fund in the U.S. has recorded its highest annual return on record. It is thanks to the rise of the U.S. stock market due to artificial <a href="https://bitcomme.com/21-business-intelligence-tools-to-know/” title=”21 Business Intelligence Tools to Know”>intelligence-oriented technology technology and venture capital (VC) investments in technology companies such as space company SpaceX.
The Financial Times (FT) reported on the 15th (local time) that Harvard University funds have returned 27.1% over the past year. It calculated the return from early July last year to June 30 this year, and its total assets increased by about 20% to $68 billion (about 90.943 trillion won).
The FT analyzed, “The Trump administration has recently pushed ahead with significant cuts in research funds and tax increases, blaming Harvard’s anti-Semitism,” adding, “This year’s profits have helped reduce salary spending and partially ease the blow of having to freeze hiring.”
N.P. Narv Narvekar, CEO of Harvard Management Company (HMC), which manages Harvard University funds, attributes this year’s outstanding performance to high returns from venture capital, stocks and hedge funds. HMC’s solid performance shows that major U.S. college funds, which have had disappointing returns over the years, are rebounding across the board.
Philip Casey, founder of fund partner technology company International LPs, said, “Harvard’s active investment strategy has been a huge success this year.”
Among HMC’s private equity holdings, venture capital investments have acted as a factor driving down overall returns in recent years. Nevertheless, the fund management has increased the proportion of investment in the asset. Private equity accounts for 46% of Harvard’s fund portfolio, up from 34% five years ago. The distribution of venture capital and growth stocks that actively invest in startups and high-growth companies also rose from 24% the previous year to 31% this year.
As the value of private technology companies soared, the venture capital investment strategy was found to have worked successfully. According to documents submitted to regulators and sources familiar with them, HMC holds about $2.2 billion (about 2.942 trillion won) worth of SpaceX shares as of the end of June. This has contributed to generating a significant return on investment with the largest single-listed shareholding in HMC history.
![A SpaceX rocket carrying a cargo spacecraft on NASA's mission is being launched from Cape Canaveral Space Force Base in Florida on the 13th (local time). [EPA = Yonhap News]](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==)
Experts pointed out that the sustainability of profits is questionable considering the growing concerns over the recent surge in the value of AI technology companies.
CEO Narvekar said, “The investment focused on the AI boom and venture sector may be Harvard’s Achilles heel,” adding, “It’s a big success year, but the trend may change.”
Some predict that this year will be a major crisis for Harvard’s financial management. This is because the Donald Trump administration cut federal research funds and sharply raised taxes on fund investment income.
The federal tax rate on Harvard Fund investment income was raised to 8% from 1.4% on July 1 this year, according to a report prepared by Harvard CFO Ritu Carla. The resulting annual cost is estimated to be nearly two-fifths of student financial aid spending. The tax generally costs $300 million (about 401.2 billion won) per year, but analysts say the cost can be several times higher in years when the return on investment is exceptionally high.
“A significant portion of the return on investment that would have originally supported education, research, financial support or other purposes designated by donors will be diverted to other uses because of taxes,” CEO Narvekar noted.
In addition, some analysts say that HMC’s high returns will have limitations in easing financial pressure on universities, as much of the fund is tied to donor restrictions.
