My knowledge of high finance is theoretical so this might be wrong but is $36 billion really that much compared to the size of the world’s financial markets Harvard gets to play in? Yes, knowledge of one takeover wouldn’t allow them to double their endowment, but knowledge of, say, ten material non-public events a year could let Harvard earn a significant above market return.
is $36 billion really that much compared to the size of the world’s financial markets
The whole market, not much, so if a fund of that size wants to shift its asset class allocaton and, say, sell a few billions of bonds and buy a variety of global equity instead, it can do this. But if, instead, it wants to buy a particular security, it can’t buy much relative to its own size. Liquidity constraints are very real at this size.
$1m profit is less than 1⁄3 of a basis point of return for a $36B fund. It’s just not worth the bother, especially given how insider trading is illegal in the US.
My knowledge of high finance is theoretical so this might be wrong but is $36 billion really that much compared to the size of the world’s financial markets Harvard gets to play in? Yes, knowledge of one takeover wouldn’t allow them to double their endowment, but knowledge of, say, ten material non-public events a year could let Harvard earn a significant above market return.
The whole market, not much, so if a fund of that size wants to shift its asset class allocaton and, say, sell a few billions of bonds and buy a variety of global equity instead, it can do this. But if, instead, it wants to buy a particular security, it can’t buy much relative to its own size. Liquidity constraints are very real at this size.
$1m profit is less than 1⁄3 of a basis point of return for a $36B fund. It’s just not worth the bother, especially given how insider trading is illegal in the US.
And the need for coordination between the admission office and the endowment manager that might leave a paper trial.