February 2014

OPINION: Managing money - the Harvard way

Fiona RintoulApril is the cruellest month, according to TS Eliot, but January can be too. If you are emerging from the January blues, blinking sleepily, spare a thought for the good people at Harvard Management Company (HMC). Not only do those doughty chaps and chapesses have to keep track of all the money in the Harvard endowment fund ($32.7 billion in June 3013), some of which is run internally and some of which is invested in a dizzying cornucopia of other funds, they also have to deal with the Responsible Investment at Harvard Coalition.   The coalition is the kind of organisation you’ve just got to love. Its website is a WordPress blog, and its press releases come from a Gmail account. But these releases are better written than 90% of the stuff in my inbox, and despite presumably having limited resources, the organisation has the wherewithal to smoke out obscure European journalists such as myself. So, what is the Responsible Investment at Harvard Coalition? “We are a group of students, alumni, faculty, staff, and other community members who are dedicated to changing the way that Harvard manages its money,” says the website. “We want to ensure that Harvard uses its $32 billion endowment for good.” What that means is that HMC has a coterie of hyperactive over-achievers on its case the entire time. The coalition’s site contains a helpful chronological list of its past failings, such as not fully divesting from apartheid South Africa and only getting a “C” for endowment transparency in the 2010 college sustainability report card, while a press campaign highlights new infringements of all that is good. The latest issue is the owner of Scolopax SRL, a Romanian forestry company. Scolpax’s managing director, Dragos Lipan Secu, has been detained by the police, along with his wife Mariana, for allegedly accepting bribes totalling Lei 4.45 million ($1.3 million) in addition to a holiday in Gran Canaria and a Chrysler Sebring car. Personally, I wouldn’t turn the street corner for a Chrysler (I’m happy with my Vauxhall Corsa). It seems, though, that others persuaded Mr Secu to buy land on behalf of Scolopax at prices favourable to the seller. And it gave the Harvard Coalition a stick with which to beat HMC. “Harvard currently has no verifiable system of oversight or accountability for the practices of its fully-owned companies,” fulminates Aryt Alasti from the coalition. “We are demanding that Harvard adopt a Position of Responsible Ownership that works to maintain legal compliance, fair environmental and labour practices, respect for land rights and non-discrimination policies, and transparency
in corporate governance.” It’s the students, judging by the coalition site, who lead the way within the organisation, and they, of course, are titivated by the certainties of youth. No doubt many of them will drift off to join a Jones Smith & McGinty somewhere and lose their idealism.   But the Harvard Coalition is also a sign of the times. HMC has been running Harvard’s endowment fund since 1974; the coalition came into being just two years ago in 2012. As such, it represents a new departure in the popular oversight of investments.    Long ago, I attended a gala dinner at a conference in Cannes. A magician was going round the tables performing tricks. I was at a table with some people from Banque Indosuez and a phantasmagorically boring and opinionated professor of law from Harvard. As the magician approached our table, a Banque Indosuez executive grabbed him by sleeve, pointed discreetly to the professor and whispered: “Can you make ‘im disappear?” To our intense disappointment, the magician was unable to. I suspect the Harvard Coalition won’t be made to disappear either. Rather, expect more of the same – in Cambridge, Massachusetts or wherever investments are made on other people’s behalf. Fiona Rintoul is editorial dorector at Funds Europe
©2014 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.