Harvard's $50 Billion Liquidity Crunch

 

Harvard is reportedly issuing $1.2 billion debt to raise cash. Seems their $50 billion endowment, much like that emergency stash of cash you swore you wouldn't touch, isn't exactly liquid when you need it most.

 

The culprit? A hefty allocation to those alluring, yet illiquid, alternative investments – the darlings of endowment managers for their potential to deliver juicier returns than your run-of-the-mill stocks and bonds.

 

Private equity, for instance, can offer a compelling opportunity for higher portfolio returns and diversification beyond the public markets.

 

Now, with the feds taking a closer look at their research funding and Congress considering a heftier endowment tax, Harvard's reaching for the financial oxygen tank of bond issuance.

 

There is a lesson here for everyone. After seeing how Harvard is allocating its investments, others may be looking to add more private equity exposure to their portfolio. Meanwhile, Harvard has proven the old cliche that you can have too much of a good thing, especially if that good thing lacks liquidity.

 

If you're intrigued by the idea of adding some private equity exposure to your portfolio, contact us today.