Harvard’s endowment is the largest and most respected in the world. So, when the brains behind it invest in exchange traded funds (ETFs), people take notice.
As of June 30, Hardvard’s endowment totaled $27.7 billion, or a 11% gain year-over-year, writes Dan Caplinger for MSNBC.
For the Sept. 30 quarterly SEC filing, Harvard’s endowment fund held 126 different securities, which includes more than two dozen ETFs. The fund emphasizes international holdings, more notably in the emerging markets. [More on Emerging Markets.]
There are five key lessons investors can take from Harvard’s endowment:
- Diversification. The endowment fund holds a little bit of everything, including commodities, U.S. stocks and REITs, and the securities are not concentrated in any one area.
- Specialized Investments. For many investors, a broad-based ETF may do just fine. But sophisticated investors may want funds that provide exposure to specific areas of the market.
- Closed-end Funds (CEFs). Harvard also includes broad-based Tri-Continental, India and Korea CEFs. CEFs may be attractive to those with long time horizons. [ETFs vs. CEFs: What’s Best in Retirement?]
- Using ETFs. Harvard not only diversifies across asset classes, but across securities, using ETFs to round out or amplify certain positions. This underscores the versatility of ETFs, and Harvard gets it.
- Going Overseas. Harvard doesn’t just stick to its home turf; the university recognizes the value of an overseas allocation and takes advantage of the opportunities that ETFs give in getting that exposure.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.