The successful but controversial manager of Harvard University's endowment announced Tuesday that he would be leaving his position at the school to start his own investment firm. Four other top managers from the Harvard Management Company, a nonprofit organization, will join Jack Meyer in starting a new firm in the private sector.
During Meyer's 14-year stint as manager, the Harvard endowment grew from $4.7 billion to $22.6 billion. While the investment techniques Meyer and his staff employed have yielded high returns, Harvard's top money managers have often come under scrutiny for their Wall Street-caliber salaries. In the last fiscal year, the staff earned a total of $78.4 million.
Some of the ways in which Harvard invests its endowment money "are not traditionally things that colleges and universities do," Dartmouth Associate Vice President for Fiscal Affairs Julie Dolan said. Harvard was able to make riskier investments than other universities due to the endowment's considerable size, Dolan said. Harvard's endowment is the largest in the Ivy League.
Meyer told The New York Times he wanted to pursue a career in the private sector but was also glad that his salary would no longer be under public scrutiny. "It would be nice to drop out of the public spotlight a little bit," he said.
Harvard alumni and others associated with the university have lately questioned the university's generous compensation of money managers in light of continually rising tuition.
The departure of Meyer and his associates marks the sixth time a team of investors has left Harvard for the private sector. It is not yet known who will take over Meyer's position, and it is possible that Harvard will move to a completely external management group.
Dolan, who is familiar with Meyer's successes at Harvard, said: "It will be interesting to see what Harvard does and how he and his new firm do. He's been an institution at Harvard for years and Harvard's certainly done very well by having him there."
Dartmouth's endowment is significantly smaller than Harvard's, about $2.5 billion at the end of the last fiscal quarter. Though the endowment has grown during the last quarter, Harvard's investment techniques are still too risky for the College to mimic directly, Dolan said.
In the last full fiscal year, Dartmouth's endowment increased 18 percent, a return nearly as high as Harvard's 21.1 percent increase. The Dartmouth endowment, however, has not performed nearly as well in recent years, with only a 2 percent increase last year and a 5.7 percent decrease in 2002.
Jonathon King, associate vice president for investments at the College who was involved in handling the College's endowment, recently left his post for the University of North Carolina.
