When it comes to university endowments, Harvard's has long been the one to beat. While many of the oldest and most prestigious schools in the nation have sizable endowments, Harvard's, which stands at roughly $37.5 billion, is the largest. Like other traditional hedge funds, though, Harvard Management Co. has been plagued with problems associated with the recent investment climate of low returns, investor fatigue, and more. As part of an effort to turn the tide on its endowment's profits, managers at the fund are cutting roughly half of the 230 jobs and making significant internal restructuring plans. At the same time, some leaders at the fund are looking to this as a chance to leave Harvard in search of new opportunities in the hedge fund world.

Three Managers Leaving to Start Two Funds

According to a report by Bloomberg, three high-level managers at Harvard's endowment fund are leaving the organization in order to start two different new hedge fund efforts. Michele Toscani and Graig Fantuzzi, both portfolio managers in the fixed income area at Harvard Management Co., will team up to create a new hedge fund. At the same time, Sanjiv Bhatia, who focuses on emerging markets at Harvard's endowment, is leaving to begin efforts to launch his own fund. The information about these new projects has come from individuals with close knowledge of the matter.

Harvard Management Co. Looks to Changes in the Future

The departures of these three managers comes at a fortuitous time, as Harvard Management is making big plans to change its internal structure in an effort to augment its performance levels. The fund announced last month that it will eliminate half of its employees by the end of 2017, while at the same time closing down one of its internal hedge fund units. Though Harvard's endowment remains the largest in the country, many other Ivy League institutions have seen significantly better returns in recent years.

The future of Toscani, Fantuzzi, and Bhatia with regard to their new funds' relationships with Harvard Management is unclear. The university fund announced that it was "exploring investing relationships" with potential new partners, although it did not specify any of the funds that would potentially be involved. Harvard Management Co. had about $8 billion invested in an internal platform as of the middle of 2014, with another $6 billion committed to a variety of hedge funds as of 2016. Heading up the university's restructuring plans is Nirmal Narvekar, the new CEO of Harvard Management as of December of 2016. Narvekar has announced plans to move from a "silo investment approach to a generalist investment model" with fewer employees and a more streamlined operation, as he had in his previous position with Columbia University.

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