Word: illiquidity
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Harvard’s investment strategy, which has long emphasized broad diversification of assets, has also made the portfolio more illiquid, or difficult to convert back into cash. This has proved especially problematic amid the broadly slumping markets of the past year...
Tilghman acknowledged that some have criticized the school’s diversified investment portfolio, which includes illiquid assets such as real estate and private equities, for “expos[ing] the University to unacceptable levels of risk.” She said Princeton would be “reviewing [its] overall investment strategy” to help it weather future severe downturns...
...profit, "If your carrying spread is wide enough, you'll comfortably take the currency risk," says Johanna Chua, chief economist with Citigroup in Asia. In fact, Chua says, the dollar carry trade has become so widespread among traders in Asia it has even triggered buying of more exotic and illiquid currencies like the Sri Lankan rupee. "That's the ultimate carry trade," Chua says...
...Yale administrators said that no more than 100 of the total 9,000 non-faculty employees would be laid off. Harvard has laid off 275 employees, out of a staff of 13,000. The so-called Yale model of endowment management—characterized by significant exposure to nontraditional, illiquid asset classes including private equity—has come under attack in recent years as many university endowments, including Harvard’s, have suffered heavy losses with that strategy in the economic downturn. Yale’s endowment return has averaged 15.9 percent over the last 20 years, excluding...
When markets plummeted across the board last fall, Harvard, along with many other investors and peer institutions, sought to reduce exposure to those illiquid, alternative assets and instead boost cash reserves for operations. Private equity holdings are especially taxing since they often require ongoing and continued capital commitments from investors...