Harvard fund CEO Stephen Blyth resigns
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For the fourth time in 10 years, the Harvard University endowment is looking for a new leader.
Stephen Blyth, chief executive of the $37.6 billion fund for 17 months, has resigned for personal reasons, the endowment's management company said Wednesday.
Blyth, 48, had been out since May on a previously reported medical leave. His resignation was effective immediately, bringing to a close a brief and tumultuous tenure at the top of the world's largest educational endowment.
Harvard Management Co. said operating chief Robert A. Ettl will remain interim chief executive. The Harvard Management board has hired a search firm, David Barrett Partners, to find a replacement for Blyth.
Harvard spokesman Paul Andrew declined to comment on whether Blyth's departure after a decade in various posts at the endowment was related to his medical leave.
"We understand and support Stephen's decision to step down for personal reasons,'' the board said in a statement. "We wish him well in his future endeavors and look forward to his continued contributions as Senior Advisor to the HMC Board."
A London native and Harvard PhD statistician with a big personality, Blyth took over as chief of the fund at the beginning of 2015, charged with improving performance. He proved to be a controversial figure, changing the endowment's investment approach and cutting some high-level staff, while also facing the surprise departures of some talented managers.
Charles Skorina, an executive recruiter in San Francisco who follows the endowment world, predicted that Harvard would move away from the model of using its own managers to invest a large portion of its money. The method worked masterfully under former chief Jack Meyer in the 1990s, he said, but has left Harvard lagging its elite peers over the past several years.
Most other major endowments hire outside firms to do the hands-on money management. Harvard does that too, paying hedge funds, private equity firms, and others to run portions of its assets. Last month, Harvard said it would no longer manage billions of dollars of stocks internally.
"I think the board of the management company has concluded they need a different model, and therefore they need a different type of person,'' Skorina said. He suggested the board go "en masse over to Seth Alexander's office" at the smaller but better-performing Massachusetts Institute of Technology endowment. "Make him an offer he can't refuse."
MIT outsources its investments. Alexander is a protege of the famous Yale University endowment manager David Swensen.
Blyth was gung ho to boost Harvard's performance and return the group to what he considered a high-powered investment perch.
A former Wall Street executive, he kept a trading desk in the endowment's main room, high in the Federal Reserve tower downtown, in addition to his glass-walled office. His artwork was featured on the walls in and around his office — colorful maps hewn out of old license plates.
In his first public comments since taking a leave, Blyth in a statement Wednesday indicated that he would again teach at the university.
"It has been a privilege to lead HMC, to work with such a talented team over the past decade, and to support an institution that makes a powerful impact in the world," he said. "Harvard has played such a positive role in my life and, as I look forward to my next chapter, I am delighted to return to teaching and interacting with the students and faculty who remind all of us at HMC why the work that is done here is so important."
The job also comes with considerable pressure, despite the appearance of ivory tower benefits, according to search executives and people who have worked there. A string of endowment chiefs, including Meyer, has bristled over public scrutiny of their pay packages.
In 2014, the latest year for which figures are available, the six highestpaid executives received $45 million. Some alumni and faculty have long suggested the group was overpaid for its results.
The fund has produced an annualized 7.6 percent return over the past 10 years, compared with 10 percent for rival Yale University.
Harvard University president Drew Faust, in a statement, said Blyth has made "extraordinary contributions to Harvard University as a teacher, an alumnus, and a leader at HMC." She added, "We look forward to his return to teaching and thank him for all that he has done and will continue to do for Harvard."
Blyth followed Jane Mendillo, who inherited the chief executive job just as the financial crisis hit, and was credited with being a calm hand at the wheel during a period of deep investment losses and a cash crunch.
She took some risk out of the portfolio after the upheaval and was later criticized for returns that lagged other elite universities.
Prior to Mendillo, the fund was managed by Mohamed El-Erian, who left in December 2007 after nearly two years on the job, as the subprime mortgage market was collapsing, to rejoin Pacific Investment Management Co., or Pimco.
For Harvard to have four chiefs in 10 years, said Skorina, the recruiter, is "simply unacceptable."