By Svea Herbst-Bayliss
NEW YORK (Reuters) - Harvard University's endowment fund, the world's largest university endowment, lost money during the last year, marking a dramatic U-turn from the previous year's double-digit gains.
Rattled by tumbling global markets, Harvard Management Co said it lost 1.8% in the fiscal year ended June 30, leaving the total endowment at $50.9 billion.
University officials called the return a "very good result" viewed against the backdrop of stock and bond market declines, but acknowledged the previous year's 34% gain, which swelled the endowment to $53.2 billion, "has been muted by this year's market reversals."
"The most significant impact was the poor performance of global equity markets over the course of the year," N.P. "Narv" Narvekar, chief executive of Harvard Management, wrote in a letter released on Thursday.
Given its size, Harvard's investment strategies and returns are closely watched. Other prominent universities also said they struggled with markets roiled by runaway inflation, war in Ukraine and rising interest rates.
However, Harvard's Ivy League rival Yale University reported a tiny gain of 0.8% during new chief investment officer Matthew Mendelsohn's first year at the helm, noting this was the school's lowest percentage return since the financial crisis. Yale's endowment stood at $41.1 billion.
Columbia University said it lost 7.6%, leaving its endowment at $13.3 billion. A year ago Columbia posted at 32% return.
Brown University lost 4.6%, decreasing the value of its endowment to $6.5 billion, the school said.
The latest annual returns for many schools are the worst since the financial crisis of 2008 with the benchmark Wilshire Trust Universe Comparison showing a loss of over 10% for the year.
Many of these endowments pioneered putting money into hedge and private equity funds as well as asset classes like real estate and natural resources.
Harvard's endowment chief noted that some other universities boosted returns by getting into the conventional energy sector. Last year, Harvard pledged to stop investing in fossil fuels after years of pressure from students, faculty and alumni.