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Harvard Endowment Hearts iShares
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Posted on February 19, 2010 at 14:50 PM EST
Harvard’s endowment is a big player in the ETF industry. Or should we say, in iShares. The exchange-traded fund industry loves the fact that Harvard’s endowment holds large positions in ETFs. Scroll around the Web enough and you’ll come across a story noting that “9 of Harvard’s 10 largest positions” are in ETFs. Those statements stretch the truth. They are based on the 13-F filings that Harvard (and all other institutional investors) must make periodically with the Securities and Exchange Commission disclosing their positions in publicly traded securities . That last caveat is important, because the vast majority of Harvard’s $30+ billion is tied up in private placements and private investments. Still, it is true: According to the latest 13-F filing, which hit the SEC this week, nine of Harvard’s 10 largest positions are in ETFs. (The tenth, for the record, is Spider-Man producer Marvel Entertainment (NYSE: MVL).) It’s not chump change, either. All told, Harvard has $1.66 billion invested in ETFs, mostly in iShares. The table below details all of Harvard’s ETF positions as of its recent SEC filing. Harvard’s ETF Positions – February 2010 Fund Ticker Position ER Net Annualized Fee iShares MCSI Emerging Markets EEM $388,000,859 0.72% $2,793,606 iShares FTSE/Xinhua China 25 FXI $342,862,564 0.73% $2,502,897 iShares MSCI Brazil EWZ $256,831,242 0.65% $1,669,403 iShares MSCI South Korea EWY $185,963,281 0.65% $1,208,761 iPath MSCI India INP $107,770,579 0.89% $959,158 iShares MSCI South Africa EZA $92,313,366 0.66% $609,268 Market Vectors Russia RSX $85,932,871 0.62% $532,784 iShares MSCI Mexico EWW $80,079,149 0.55% $440,435 iShares MSCI Malaysia EWM $47,064,582 0.56% $263,562 iShares MSCI Taiwan EWT $36,477,636 0.82% $299,117 Vanguard Emerging Markets VWO $16,858,957 0.27% $45,519 iShares MSCI Turkey TUR $5,844,029 0.65% $37,986 iShares MSCI Hong Kong EWH $4,792,189 0.55% $26,357 WisdomTree India Earnings EPI $4,157,986 0.88% $36,590 iShares S&P Latin America 40 ILF $3,228,973 0.50% $16,145 iShares MSCI Israel EIS $2,490,836 0.66% $16,440 iShares MSCI Japan EWJ $993 0.56% $6 TOTAL $1,660,670,095 $11,458,034 Source: Bloomberg A few things stand out here, besides the heavy iShares focus. First, Harvard clearly considers ETFs a tool for accessing emerging markets. There are no currency, commodity or U.S. equity funds here. The only mainline developed markets fund is the iShares MSCI Japan ETF (NYSEArca: EWJ), where Harvard has a whopping $993 invested. Second, as big as it is, while Harvard holds just 0.2 percent of total ETF industry assets, it has huge stakes in a number of individual funds. The endowment owns 19 percent of the iShares MSCI South Africa ETF (NYSEArca: EZA), for instance. And net-net, Harvard is coughing up more than $11 million in fees for the privilege of owning these ETFs. That probably keeps a few iShares workers employed. Third, I’m intrigued to see that Harvard owns an ETN: $108 million worth of the iPath India ETN (NYSEArca: INP). That ETN has had a few problems, occasionally halting the issuance of new shares and trading at a premium as a result. But Harvard, with a long-term planning window, presumably feels this is not an issue. Finally, I’m intrigued by the areas where Harvard owns competing funds. It has a $388 million position in the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), for instance, but also owns a $17 million position in its direct competitor, the Vanguard Emerging Markets ETF (NYSEArca: VWO). It has $108 million in INP, but also owns a tiny stake in the WisdomTree India Earnings ETF (NYSEArca: EPI). Is it considering shifting toward the upstarts and away from the dominant players? If so, can we expect more dalliances? Perhaps a dose of the SPDR China Fund (NYSEArca: GXC) to balance out that large FXI position? I suppose we’ll just have to watch future 13-F filings to find out. Permalink | © Copyright 2010 Index Publications LLC. All rights reserved
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