Harvard U.S. Equities See 14 Percent Rise in Value

The value of Harvard’s U.S.-traded equities rose by 14 percent in the first quarter of fiscal year 2012 as U.S. markets continue to recover from the financial crisis, according to the University’s filings with the Securities and Exchange Commission Friday.

Harvard’s U.S.-traded stocks slightly outperformed both the Dow Jones Industrial Average and the Standard and Poor’s 500 indices, which rose by about 12 percent and 11.5 percent, respectively, in the same period. In the last quarter, the University has shuffled the apportionment of its equity holdings.

The total value of Harvard’s U.S. traded equities rose to $1.05 billion in the first quarter of the fiscal year from about $921 million in the previous quarter, representing a reversal—if slight—of a recent declining trend in the value of Harvard’s U.S. stocks. The current value of these investments is slightly lower than the value at the same time last year.

The report reveals that over half of Harvard’s U.S. stocks are exposed to emerging markets. The largest of these investments, comprising over a quarter of the value of Harvard’s U.S. stocks at $294 million, is in a fund that tracks the performance of Brazil. Harvard’s investments in instruments that track the health of sovereign economies are clustered among Brazil, Russia, India, and China—the so-called “BRIC” nations—in addition to holdings in other South Asian and Latin American countries.

As in years past, Harvard’s investments also show a marked trend toward the energy, natural resources, and telecommunications industries in Latin America.

The filings reveal that in the last quarter, Harvard shed many of its investments in gold and gold mining companies. Since the last quarter, the University has divested from gold mining companies, such as AngloGold Ashanti Ltd. and Gold Fields Ltd.. Over the past year, gold prices reached historic highs, but some expert have expressed doubts that these price level will persist.

This move could also reflect a growing sentiment that U.S. markets are recovering from the downturn, as gold is traditionally viewed as a hedge against financial uncertainty.

The filings also show increased investment in the technology industry. Of the 11 new investments made this quarter, seven of are in technology-related companies, and many operate in China, including Yucheng Technologies Ltd and Qihoo 360 Technology Co. Ltd.

In addition, Harvard recently bought over half of the global IT company SuccessFactors, Inc., which provides cloud-based “business execution” software, according to the company’s website.

Since the onset of the financial crisis, Harvard has seen a sharp decrease in the value of its U.S. stocks. Between the fourth quarter of FY2008 and the first quarter of FY2009, the value of Harvard’s U.S. stocks decreased by over 75 percent—from $2.88 billion to $571 million—as the market crashed and investors at the Harvard Management Company sought safer investments. The value of these investments was as high as $4.17 billion in 2007.

—Staff Writer Benjamin M. Scuderi can be reached at bscuderi@college.harvard.edu.