Harvard University’s immense endowment took a body blow yesterday when its longtime president, Jack Meyer, announced that he is starting his own money-management firm and taking his top four managers with him. In his nearly 15-year run as head of Harvard Management Company, Mr. Meyer helped the endowment earn large returns and explode in size, to $22.6 billion from $4.7 billion.

He became famous for his iconoclastic investing style, putting $2 billion of the endowment’s cash to work in timber assets, for example, while other university endowments rotated into hedge funds. He plans to stay at the management company until June 30.

Mr. Meyer told The New York Sun that his new venture would be dedicated to various bond strategies. “The three managers coming with me have pretty strong track records, and I want to start from a position of strength,” he said.

Mr. Meyer declined to say whether the new firm would be a hedge fund or a traditional long-only money manager.

Mr. Meyer’s new firm should be starting from a position of strength. At Harvard Management, the two senior bond managers leaving with him, Maurice Samuels and David Mittelman, recorded superior performances last year. Mr. Samuels’s portfolio of foreign bonds was up 17.5%, compared to its benchmark’s return of 7.6%. Mr. Mittelman’s foreign bond portfolio was up 9.2%,versus a loss of 3.4% for its benchmark. Mr. Meyer is also taking with him Harvard Management’s chief risk manager, Michael Pradko, as well as an emerging-markets bond manager, Edward DeNoble.

The returns generated by Mr. Meyer and his team helped Harvard’s endowment expand to a level roughly twice that of the next largest university endowment in America, Yale University’s. Last year, the fund returned 21.1%, outperforming the median large institutional fund by 4.9 percentage points, according to the Trust Universe Comparison Service. Moreover, it outperformed the median 17.1% return of the 25 largest college endowments.

Since 1994,Harvard Management has returned an annual average of 15.9%, and since 1990, when Mr. Meyer joined, it has averaged a 14.7% annual gain.

In a September press release announcing last year’s results, Mr. Meyer said that if Harvard Management, in the previous decade, had posted median returns for large diversified funds, the university would have “about $12.2 billion less.”

The Harvard Management team was handsomely paid, which raised the ire of some Harvard alumni and some campus groups. Mr. Meyer received $7.2 million last year in total compensation. Messrs. Mittelman and Samuels were paid more than $25 million each. In 2003, Mr. Samuels earned $35.1 million when his domestic-bond portfolio, with about $2.2 billion in assets, returned 52% versus a benchmark of 18%.

Despite the almost unprecedented performance, the generous compensation sparked a protest effort led by 11 members of the Harvard class of 1969, who in a letter to the university’s president, Lawrence Summers, said, in part, “We reject the notion that these pay levels are fair market value for this performance.”

Ironically, Mr. Meyer reduced compensation packages overall last year, despite Harvard Management’s sharply higher performance over 2003’s 12.5% return. That stemmed from the yearlong uproar over 2003 pay levels, a hedge-fund manager who invests money on behalf of Harvard Management said. Last year, the top six managers earned $78.4 million, a 27.1% decline over the $107.5 million the top six were paid in 2003.

As to why he was leaving this year, Mr. Meyer said it had little to do with the compensation scrutiny. “It’s been a great 15 years,” he said. “I felt it was time to explore a new challenge to see what I could do.”

People who have studied Mr. Meyer and his team’s performance are certain that it played some role in his decision. “His performance was epic and he was a true pioneer in the endowment area,” a managing director at Commonfund, Jud Koss, said. Commonfund, based in Wilton, Conn., manages more than $30 billion for the endowments of hundreds of universities.

“It is hard to communicate to people that while these compensation levels are very high in relative terms, they actually are a discount to what is standard in other money-management firms,” Mr. Koss said.

Harvard Management under Mr. Meyer developed a reputation for moving in an entirely different investment direction from other endowments.

In the late 1990s, while allocation to hedge funds became popular among endowments, Harvard Management moved more assets in-house and began to expand its direct investments in natural resources. That culminated with the $650 million purchase in 2003 of a 408,000-acre tract on New Zealand’s North Island. The university now controls 1.3 million acres of timberland on two continents.

Another direction Harvard Management took has raised a few eyebrows, and not just among alumni. Since 1998, according to a November report in The New York Times, Harvard Management has invested between $500 million and $1.8 billion at five outside money-management firms. In return, Harvard Management has been given a percentage of the fees the funds charge other clients. The article raised the question of whether the investments violated Harvard Management’s tax-exempt charter, as well as the company’s 1998 prohibition on investing endowment money directly with outside managers. Former Harvard money managers ran all five management firms, the article said.

Mr. Meyer, in the November interview, said the arrangement had saved Harvard Management more than $125 million in fees. One tax expert quoted in the article, the director of New York University’s National Center of Philanthropy and the Law, Harvey Dale, said any fee income earned by HMC was “passive,” meaning it hadn’t been earned directly by Harvard Management and was therefore not taxable.

Harvard has appointed a blue-ribbon panel to find a successor to Mr. Meyer. Among its eight members are Mr. Summers and his former boss at the Department of the Treasury, Robert Rubin, the former managing partner of Goldman Sachs.