Harvard has a $57 billion endowment. And for years, the university was trying to solve an issue: its endowment was trailing the schools it measures itself against. 

While it was, and remains, the largest university endowment in the world, it’s struggled to keep up with its peers. 

Between 2020 and 2024, Ivy League endowments returned just over 11% on average. Harvard’s return was just 10.3%. 

That might seem like a small difference, but universities rely on their endowments to fund school operations. Lower returns mean less funding for research projects, financial aid, and campus upgrades. 

Among the top five largest endowments, the gap was even wider. MIT was the best performer with nearly 13% while Harvard came in last place. 

Under Harvard Management Company CEO N.P. “Narv” Narvekar, the school pushed deeper into private equity.

Private equity helped elite endowments post stronger long-term returns. Harvard wanted a larger seat at the table.

The endowment’s private equity allocation climbed from 16% in 2017 to 41% in 2025. For a fund that supports a major university, that is a huge move into assets that can be hard to sell quickly.

The timing is painful. Harvard relies on endowment payouts for more than a third of operating revenue. It also faces federal funding pressure and a higher excise tax on endowment income starting in July.

To complicate matters further, private equity managers still have the right to ask Harvard for billions more.

Limited partners like Harvard commit money upfront. Then they hand it over gradually when managers issue capital calls for acquisitions, fees, or follow-on investments.

That setup works when older funds are selling companies and sending cash back. The money coming in helps cover the money going out.

Harvard is running into the other side of that machine. Capital calls can continue even when distributions slow.

Its unfunded private equity commitments climbed from $4.6 billion in 2017 to $7.9 billion in 2025. According to people familiar with the matter, that figure remained elevated this year.

Harvard had about 3% of its endowment in cash in 2025, translating to roughly $1.7 billion.

The university can tap public stocks, bonds, and hedge fund stakes. It’s not out of options, but the mismatch is clear.

Harvard has billions of dollars of future private equity obligations. Its easiest cash cushion is much smaller than that. And its private assets are not built for quick exits.

As mentioned previously, Harvard’s private equity exposure rose from 16% to 41% in eight years.

The bet looked brilliant during the 2021 deal boom, when Harvard Management Company posted a record 33.6% return. Then interest rates rose, and the traditional PE exits like IPOs and private sales slowed down.

Harvard lost money in 2022. It only returned 2.9% in 2023. That leaves the university with less cash coming back from old funds today and more obligations still sitting ahead.

That said, Harvard isn’t the only endowment with this problem. Other major endowments also increased private market exposure during the early 2020s. 

Institutions are private equity’s core customers. Endowments, pensions, foundations, and sovereign funds provide the money that enables managers to raise new funds, buy companies, and wait years for exits.

When those institutions become more cautious about signing more commitments, PE firms have to adjust.

Bain has said fundraising lagged in 2024 as limited partners kept allocations in check after long holding periods.

Any incoming endowment chief at Harvard would have a hard time ignoring the company’s liquidity problem. And in all likelihood, the university’s foray into PE has reached its peak. 

If big institutions are asking harder questions, PE managers need to find new buyers or risk a total collapse. 

That’s why more of them are selling into private wealth channels that are easier to sell outside the traditional endowment and pension world.

Harvard’s case is proof that there are issues brewing in the PE market. And that should serve as a cautionary tale to investors.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research

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