Did Harvard Make a Diversity Hire to Run Its Money?

I know I'll get branded a sexist pig, even though I truly hate to say it, but it looks an awful lot like Harvard made a diversity hire for the job of running its endowment. This Bloomberg article says that Jane Mendillo, who ran Wellesley's endowment, chalked up annualized returns of 13.5%. That is nice but not spectacular. More importantly though is that she did this with $1 billion. One all-but-immutable law of asset management is that it gets harder to deliver higher returns as the asset base grows larger, much harder. If Ms. Mendillo can deliver only slightly respectable returns on a modest asset base, how can she be expected to deliver the exceptional returns that Harvard is used to enjoying on an asset base 20 times larger? Generally, in the money management world, it would be unheard of to promote someone into a job managing 20 times the assets, so this hire strikes a discordant note if Harvard's goal is indeed to continue enjoying extraordinary returns on its endowment funds.

There are a couple plausible explanations. The first, of course, is that I am totally off-base and Ms. Mendillo is the exact, perfect candidate for the job. Second, we all know that Harvard has a radical group of stakeholders that demand an ever increasing amount of "diversity" (meaning anybody who is non-white or non-male, preferably both) in important positions across the university. Perhaps the same pressure that led to the downfall of Larry Summers could have affected the endowment job hiring process. Third, another small but vocal group of Harvard stakeholders vehemently protested (former endowment chief) Jack Meyer's compensation as being excessive. If Harvard addressed this concern by restricting the pay levels of the job, it is likely that they would be unable to attract candidates from the private sector who would be more accustomed to managing similarly large sums of money. I hope the first explanation is the correct one, but if it is either of the other two and returns do suffer as a result, then Harvard has placed an unnecessary burden on future stakeholders as the shortfall in resources will demand higher tuition or more donations to meet the university's resource requirements. For what? In the name of the false gods of Diversity and/or Income Equality. Time will tell, but the amount laid at the feet of these gods in sacrifice could amount to billions of dollars.