Harvard Portfolio Update

This week, we took a look at Harvard’s updated portfolio. As we wrote about in last year’s Insights, Harvard’s endowment has experienced significant change over the years and performance has lagged many of its Ivy League peers. Harvard Management Company’s CEO, N.P. “Narv” Narvekar provided this context in the most recent annual report:

With the University’s reliance on endowment distributions to fund a substantial portion of its operations — over one-third when I arrived and now approaching 40% — the endowment’s orientation toward strong investment returns has been tempered by the imperative for budgetary stability. We believe that has resulted in a lower tolerance for risk than many of our largest private university peers, which can cause lags in ebullient environments, but also provide protection during downturns.

Notably, Harvard has increased its hedge fund exposure over the past 10 years, while most peers have kept the allocation relatively stable or reduced exposure. Narvekar notes in the most recent annual report that they have increased the size of the hedge fund portfolio “as a means of limiting equity exposure (public and private, collectively) and, therefore, limiting portfolio risk.”

In our Friday customer newsletter, we also included a list of managers disclosed by Harvard, including managers disclosed for the first time. If you’d like to learn more about how OWL tracks allocator portfolios, reach out!

Star Asia Management

One manager on Harvard’s roster is Star Asia Management, a New Jersey-based, $3.5 billion manager focused on Japanese real estate. The firm’s AUM has grown more than 10x over the past 10 years with a $1.7 billion jump in 2021:

Star Asia was founded in 2006 by Malcolm MacLean and Taro Masuyama after experience at Mercury Global, PaineWebber, and Merrill Lynch. With more than 60 employees in Japan and the US, Star Asia has invested more than $10 billion in properties, loans, securitized assets, and companies since inception. Other LPs for Star Asia include Columbia, UTIMCO, MacArthur Foundation, and Howard Hughes. The University of Michigan has also invested in several Star Asia funds, noting in a publicly available investment memo:

Star Asia seeks special situations throughout Japan where the team is able to acquire high quality assets at meaningful discounts due to complexity, distress, or unique situations. It has established itself as a trusted counterparty that can move quickly and discreetly. Star Asia separates itself by having an extremely deep, nimble team that is exclusively focused on Japan. The team has the expertise to resolve both physical and financial structural issues as well as ready access to capital, differentiating it from local buyers. Star Asia’s ability to focus on a single transaction to meet a tight seller deadline gives it an advantage relative to large, pan-Asian funds. The combination of these attributes, with an unusually high level of investment discipline, has led to outstanding risk-adjusted returns.

According to recent disclosures from UTIMCO, Star Asia has generated an IRR of 232% for them, with the strongest returns coming from Star Asia’s Urban Residential fund. For more performance data on UTIMCO’s managers, see our recent Insights.

Other News/Events

• More Allocators Are Using AI as Custom Tools Advance

• Investment Managers Express Increasing Interest in Generative AI

• Ex-Point72 Japan Head to launch Hong Kong hedge fund

• An inside look at how Boeing CIO Elizabeth Tulach oversees $120 billion in DB and DC plan assets

• GEM Makes Key Hire to Expand VC Capabilities

• Baylor CIO on Investment in Counter Global

• Blackstone seeds new credit hedge fund Covara with $250m

• Ex-King Street Partner preps for launch of new $1bn hedge fund

• UVIMCO Reports 12.4% FY Return

• Gates Foundation hiring Associate, Strategic Investment Fund

About Old Well Labs

OWL is an intelligence platform built for allocators, by allocators. Leading endowments, foundations, and family offices use the system to find, monitor, and connect with thousands of fund managers globally. OWL's analytics engine has collected over one billion data points from 65 countries. We make it easy for allocators to find and track information about the managers they care about – not just positions but also performance analytics, people data, business information, and details about the manager investments of other allocators.

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