El-Erian to step down as head of Harvard Management Company

Mohamed A. El-Erian announced today (Sept. 11) that he plans to step down as president and chief executive officer of Harvard Management Company (HMC) at the end of 2007 and to return to his former company, Pacific Investment Management Company (PIMCO), as co-chief executive officer and co-chief investment officer.

“My time at Harvard has exposed me to many wonderful and interesting issues and people,” said El-Erian. “In returning to southern California to be closer to our family, I will miss my daily interactions with this special Harvard community — particularly my highly skilled and dedicated HMC colleagues, the remarkable leadership of the University and its schools, and the stimulating student body and faculty. I will leave behind close friends in an institution that, I am certain, will maintain and expand its tradition of excellence. I plan on remaining in touch with the Harvard community, especially with HMC colleagues and with President Faust, whom I have come to know well and to regard highly. I look forward to Harvard’s flourishing under her strong and capable leadership, and I will do all I can to contribute to the best possible transition at HMC during these next few months.”

“Mohamed has done an impressive job guiding and reorganizing Harvard Management Company, and we will miss his leadership,” said James F. Rothenberg, treasurer of Harvard University and chairman of the HMC board of directors. “In addition to achieving excellent investment returns, he has led ambitious efforts to rebuild HMC during his time as CEO, and those efforts will leave us with a strong organizational foundation going forward. The endowment’s recent performance and the organization’s underlying vitality and strength are a credit not only to Mohamed’s skill but also to the talent and energy of his colleagues across HMC. Our thoughts now turn to ensuring sound oversight of Harvard’s investments during this interim period and to identifying an outstanding new leader to guide HMC forward.”

Established in 1974, Harvard Management Company is the separately incorporated Harvard affiliate responsible for the investment of the University’s endowment assets and certain other funds. El-Erian was named HMC’s president and chief executive officer in October 2005 and began his service in February 2006.

For the fiscal year ending June 30, 2007, HMC produced investment returns of 23 percent, its best overall performance in seven years. Largely as a result of this performance, which substantially surpassed market and internal benchmarks, the Harvard endowment grew from $29.2 billion to $34.9 billion during the 2007 fiscal year.

El-Erian has also worked closely with HMC’s board of directors and others to reinvigorate the organization itself. This has included reconstituting and expanding HMC’s internal portfolio management capabilities by restructuring aspects of the organization and rebuilding its team of highly regarded investment professionals. In addition, HMC has revamped its array of external portfolio managers and retooled various institutional enabling functions, such as risk management, operations, and compliance. Under El-Erian, HMC has also worked to enhance its governance structure and to communicate more effectively with the Harvard community and beyond. Besides serving as head of HMC, El-Erian has been a valued participant in broader aspects of Harvard finance, including the University’s asset-liability management and its financial planning for development in Allston.

“Harvard has been fortunate to have someone as skillful and effective as Mohamed El-Erian responsible for the management of our endowment,” said Drew Faust, president of Harvard University. “He has done an excellent job leading and rebuilding HMC and it has been a pleasure working with him. Clearly, our endowment provides vital support for our academic programs and ambitions. It will be a top institutional priority to do all we can to ensure that HMC continues to deliver superior investment returns — with a focus on advancing Harvard’s educational mission and with the knowledge that generations of alumni and friends have contributed generously to the resources we have the privilege to invest. I look forward to working with Mohamed, Jim Rothenberg, and others close to HMC to sustain its record of professionalism and excellence through this interim period and beyond. Much as we will miss Mohamed, I understand his desire to return West for family reasons, and I am confident we will engage strong new leadership for HMC.”

Before coming to HMC, El-Erian was a managing director at Pacific Investment Management Company, the company to which he plans to return. He was a senior member of the firm’s portfolio management and investment strategy group. He previously spent 15 years with the International Monetary Fund in Washington, D.C. He has published widely on international economic topics. El-Erian earned a B.A. in economics from Cambridge University and master’s and doctoral degrees in economics from Oxford University.

Rothenberg said that a search would be promptly launched for a new leader of Harvard Management Company. He added that he and his colleagues on the HMC board would be working closely with El-Erian and others to manage transitional matters while the search is in progress. Members of the Harvard community and interested others are invited to convey their thoughts about the HMC search or related matters to hmcsearch@harvard.edu.