By Svea Herbst-Bayliss
BOSTON (Reuters) - Harvard University said on Wednesday that it had hired Wall Street veteran Jake Xia as its chief risk officer to analyze and monitor investment exposure in its $30.7 billion endowment.
Xia, a fixed income expert who worked at Morgan Stanley
In the fiscal year ended June 30, 2009, Harvard made headlines when its endowment lost 27 percent of its value.
It then fell to Jane Mendillo, president and chief executive officer of the school's investment arm Harvard Management Company, to overhaul the portfolio. She was forced to sell $1 billion in equities because the endowment had invested heavily in illiquid securities.
While some investors have given up on active management and balk at high fees charged by hedge funds and private equity, Harvard, which has returned an average 12.5 percent over the last two decades, is sticking with its strategy of putting money into those types of funds and real assets.
Unlike other schools, including Yale University, Harvard manages the bulk of its money in-house, which saves on fees.
Harvard's endowment losses were sufficiently deep that it was forced to make cost cuts and interrupt its high-profile campus expansion. For the fiscal year ended June 30, 2012, Harvard's endowment slipped 0.05 percent.
Xia will replace Neil Mason, who was hired by Mendillo in 2010, and will return to his native England for family reasons.
Xia earned a PhD. degree from Massachusetts Institute of Technology and has held several senior roles at Morgan Stanley around the world, including head of global structured rates trading, and head of global fixed incoming trading risk.
(Reporting By Svea Herbst-Bayliss; Editing by Richard Valdmanis, Toni Reinhold)