January 26, 2006 | Read Time: 2 minutes
In an interview with Smart Money magazine (February), the man who is about to take over as manager of the largest university endowment in the United States concedes that the job entails “many challenges.” In mid-February Mohamed A. El-Erian is scheduled to become chief executive officer of the Harvard Management Company, an affiliate of Harvard University that controls its $26-billion endowment.
Mr. El-Erian, 47, worked for 15 years as an economist at the International Monetary Fund before joining the Pimco investment firm, in Newport Beach, Calif., in 1999. The magazine says that in his current job Mr. El-Erian oversees “a $28-billion portfolio of emerging-markets debt for Pimco, the world’s largest bond shop.”
That figure is comparable to the size of Harvard’s endowment, but the terrain is decidedly different. Smart Money points out that the large majority of Harvard’s endowment isn’t in bonds and other fixed income, but rather in a diverse portfolio that includes real estate, timber, and stock.
In the interview, Mr. El-Erian acknowledges those differences, as well as the inherent challenge of succeeding Jack R. Meyer, who stepped down in October 2005 after a 15-year stint during which Harvard’s endowment ballooned from approximately $5-billion in 1990 to its current size.
“I’m following someone who has had spectacular returns and is leaving [to start a hedge fund] with 30 of his colleagues, including much of [Harvard’s] fixed-income team,” says Mr. El-Erian.
But he is still left with nearly 130 employees and, in the short term, plans to expand the percentage of Harvard’s assets that are run by external portfolio managers. And Mr. El-Erian, who earned a Ph.D. in economics from Oxford University, says he relishes the idea of being in an academic environment, even if it is what Smart Money terms “the world’s toughest academic job.”
