The value of Harvard’s endowment rose to $53.2 billion after Harvard Management Company reported a 9.6 percent return on its investments in fiscal 2024 – the first year the foundation has increased in value since 2021.

HMC’s high investment returns – significantly higher than last year’s 2.9 percent return – enabled the endowment’s value to increase by $2.5 billion starting in fiscal year 2023, the university announced Thursday known in their annual financial report.

The growth comes even as Harvard struggles with a significant decline in endowment giving due to the ongoing backlash over the university’s handling of anti-Semitism on campus.

This increase in endowment value comes after two consecutive years of declining endowments, falling to $50.9 billion in fiscal 2022 and $50.7 billion in fiscal 2023. This reversal represents a return to the upward trend in Harvard’s endowment value over the past two decades.

NP “Narv” Narvekar, CEO of HMC, wrote in the financial report that Harvard’s endowment fund had a target return of 8 percent and that annual returns of 9.3 percent averaged over the past seven years had “more than kept pace” with that goal.

Although some critics say Harvard’s endowment has underperformed in recent years, posting a 9.6 percent return on investment this year, Harvard ranks third among its Ivy League+ peers behind Brown and Columbia, respectively achieved a return of 11.3 percent and 11.5 percent.

Endowment distributions totaled $2.4 billion in fiscal year 2024 — 37 percent of the university’s annual revenue — with funds used for costs such as financial aid, faculty, research initiatives and more. According to the report, the contributions enabled the university to provide $749 million in financial aid across the university, with $250 million awarded to students.

The largest allocations within the Harvard endowment are to private equity and hedge funds, with private equity making up 39 percent of the portfolio and hedge funds making up 32 percent.

Harvard invests only 14 percent of its endowment in public stocks because of its lower risk tolerance. Fiscal 2024 was a strong year for public stocks – the S&P 500 often reached new record highs – but HMC still delivered strong returns due to its lower exposure to public stocks.

“In FY24, public equity and hedge fund portfolios stood out for their strong performance,” Narvekar wrote in the report. “This is a particularly positive indicator as the HMC hedge fund portfolio has lower equity exposure than most hedge fund indices, but still outperformed in a strong equity year.”

Harvard also reduced the foundation’s exposure to real estate and natural resources from 25 percent in 2018 to just 6 percent in fiscal year 2024. This reduction has contributed to a positive impact on the endowment’s returns, according to Narvekar.

The university reported a budget surplus of $45 million in 2024, a significant change from the $186 million surplus Harvard operated with in fiscal year 2023. Revenue growth of 6 percent was exceeded by expense growth of 9 percent.

Vice President and Chief Financial Officer Ritu Kalra attributed the increase in expenses to HMC investing in its employees.

“Our commitment to attract and retain top talent through competitive salaries accounted for just over half of the compensation increase,” Kalra wrote.

Harvard President Alan M. Garber ’76 acknowledged the challenges facing the university in a message published in the annual report.

“The work ahead demands much of each of us,” Garber wrote. “Fortunately, we are people who have generous physical and financial resources and whose ambitions are limited only by our imagination.”

“Our university will emerge from this time stronger – not despite the exam, but because of it,” he added.

Notably, endowment donations to the university fell from $561 million in fiscal year 2023 to $368 million this year.

In the report, Narvekar noted the university’s increasing reliance on endowment distributions to fund its operations.

Twenty years ago, endowment distributions accounted for 21 percent of the university budget. It is now almost 40 percent.

“The increasing dependence on this important resource makes our work even more important,” Narvekar wrote.

–Staff writer Sidney K. Lee can be reached at [email protected]. Follow her on Twitter @sidneyklee.

– Staff writer Thomas J. Mete can be reached at [email protected]. Follow him on Twitter @thomasjmete.