Harvard Management Company Case


Suggested Case Questions for Harvard Management Company Case

I would recommend writing your executive summary/memo around the following question:

Should TIPS be considered an additional asset class in Harvard’s Policy Portfolio? In other words, should Harvard invest its endowment in TIPS?

The memo that your case group presents should be no more than 1 page in length. The attached analysis can include calculations, graphs, figures.

For the list of questions below, you can use these as a way to structure your analysis that accompanies the memo. Or even as a way just to read through the case. I will call on people during the case discussion to answer these questions as well.

  1. How do regular (nominal) Treasury bonds work? How does inflation impact the coupons and principal of a T-bond? How are TIPS different from regular T- bonds? When do TIPS (out) underperform regular Treasuries?
  2. What effect do you think an increase in real interest rates has on the price of TIPS? And an increase in realized inflation? An increase in expected inflation? An increase in inflation risk? Are these effects different for a regular Treasury bond?
  3. What is Harvard’s Policy Portfolio? How is this portfolio determined? How does the Sharpe ratio contribute to the analysis?
  4. How does HMC develop its capital market assumptions? Why does HMC focus on real returns when making its forward-looking view of expected returns andrisk? What do HMC’s capital market assumptions imply for the U.S. equitypremium and the foreign equity premium?
  5. What are HMC assumptions about the expected real return on TIPS, its volatility, and its correlation with the real return on the other asset classes? What is the correlation of TIPS with the proposed Policy Portfolio excluding TIPS? What do they imply about real interest rates and inflation risk?

Case Requirements

The case is due at the beginning of class – no exceptions to this rule.

For the assigned cases, the group is responsible for preparing a thorough write-up of the case and for presenting their analysis to the class. You may include attachments of your creation (do not just attach case exhibits) such as graphs, tables etc – providing they are referenced. Any Excel attachments must be included as a hardcopy. The report should not exceed 5 pages (1.5 – double spaced. No single spaced reports please).

The attached memo should be single spaced and should not exceed one page. The memo covers the recommendations and your supporting justification. The memo should be addressed:

To: From: Date: Subject:

Sample Guideline Questions for each case were posted on Canvas at the beginning of the quarter.

Also proof read your entire case write-up.

This is from the first class discussion – but if you are still having difficulty “getting started”,as you read through the case think about these questions

The following questions are among those which are generally relevant to all cases:

Who is the protagonist?
What are the objectives? (implicit or explicit)
What decisions (implicit or explicit) must I make?
What problems, opportunities and risks does the protagonist face?
What evidence do I have to help make the decision?
Is the evidence reliable and unbiased?
What alternative courses of action are available?
What action should I take?
How should I convince others (my group, the professor or the rest of the class) that my approach is best?