Endowment chief named at Harvard

Mendillo returns to run $34.9b fund after Wellesley job

Jane Mendillo is a Yale graduate

After six years running the Wellesley College endowment, Jane Mendillo is returning to Harvard University - this time as the chief executive of the school's $34.9 billion endowment, the world's largest academic fund.

Mendillo, 49, knows her way around Harvard Management Co., the group that runs the endowment, having spent 15 years there before joining Wellesley as chief investment officer in 2002. She started as an equity analyst at Harvard, oversaw private equity for a time, and ultimately ran $7 billion in assets, as head of the endowment's relationships with the outside firms that manage a portion of the school's money.

"Jane Mendillo has an excellent record as one of the most able and accomplished investment managers in the endowment world, as well as an extensive knowledge of the Harvard endowment and a deep commitment to higher education," said Harvard treasurer James Rothenberg, who also is chairman of the Harvard Management board.

On Mendillo's watch, Wellesley's portfolio grew from $1 billion to $1.7 billion and saw average annual returns of 13.5 percent. She restructured the assets to set clearer benchmarks, taking a page from the Harvard model, and built a more diverse, sophisticated set of investments, the school said.

Harvard's average annual return over the past six years is 15.3 percent; Yale's is 17 percent. Nationally, the average 10-year return for US colleges and universities was 8.6 percent at the end of 2007.

Mendillo acknowledged she is taking on a big job amid turbulent markets. But, she said, "The Harvard portfolio is very well positioned. I think there will be significant money-making opportunities."

Rothenberg joked that there is one flaw on Mendillo's resume: "Two degrees from Yale."

Indeed, Mendillo holds a master's degree in business and an undergraduate degree in English from Harvard's archrival. She serves as an adviser to Yale's top-performing endowment, a post from which she will resign before joining Harvard on July 1.

Yale University president Richard C. Levin said Mendillo was once one of his favorite economics students. "We're delighted to see the Harvard endowment in the capable hands of a Yale graduate," he said.

Mendillo, the first woman to be named to run Harvard's endowment, said she has no plans to make immediate changes when she joins the group. But she is planning to stay longer than her predecessor. She succeeds Mohamed A. El-Erian, who left at the end of 2007 after a tenure of less than two years, to return to his prior firm.

"We need to look at our portfolio on a very long-term basis. I think that long-term perspective will be one of the key focuses of my time as president," Mendillo said.

The post is a privileged one in the world of investing, but it also requires a thick skin, past chief executives have found. Annually, Harvard Management discloses the pay of its top inside managers, as tax law requires of nonprofits. The multimillion-dollar pay packages, based on performance, barely raise an eyebrow in investment circles but routinely spark criticism among some students, alumni, and faculty.

Mendillo said the annual pay debate doesn't bother her. "It's not an issue," she said.

Pay issues, however, have played a role in driving away many talented Harvard managers. One was Jack Meyer, the highly successful chief executive of Harvard Management from 1990 to 2005. Meyer, who left to start a hedge fund, said Mendillo is a great match for Harvard. "Jane is smart, she's experienced. She's quite soft spoken but tough, a very good negotiator. She knows Harvard, she knows Harvard Management Co."

Meyer and other former Harvard executives now manage money for the endowment from the outside.

Relationships with him and others will be a big part of Mendillo's job: 70 percent of the nearly $35 billion is now managed by outside managers, up from 30 percent early this decade, in a shift driven largely by El-Erian.

About $10.5 billion is managed in-house by a staff of 175.

Mendillo plans to stay at Wellesley through the spring semester, a spokeswoman for the college said. Wellesley will conduct a search to replace her.

"Jane Mendillo has been a superb steward of Wellesley College's endowment," Wellesley president H. Kim Bottomly said in a statement.

"The six years I spent at Wellesley were a great experience and a real joy," Mendillo said. "I had terrific colleagues there, and the portfolio is in really great shape."

Beth Healy can be reached at bhealy@globe.com, Steven Syre at syre@globe.com.