In March 2006, a New York Times reporter asked Mohamed El-Erian, recently named head of the Harvard Management Company (HMC), how long he planned to stay at the university. “I just arrived,” a startled El-Erian replied. How could he possibly say how long he intended to stick around?

The answer proved to be: not very long. On September 11th, El-Erian, 49, announced that by year’s end he would leave the company that manages Harvard’s endowment and return to his former firm, the Pacific Investment Management Company (Pimco), as co-chief executive officer and co-chief investment officer—a newly created position that may pave the way for him to head Pimco. Just 21 months after taking the Harvard job, El-Erian is retracing his steps to Newport Beach, Calif., where Pimco is based. “It’s a big loss,” admits one Harvard official who has worked closely with El-Erian. An alum familiar with HMC’s workings puts it more strongly: “As big a loss as Harvard has had in a long time.”

When El-Erian was first announced as the replacement for legendary HMC chief Jack Meyer, many considered the choice surprising. El-Erian managed a very successful bond fund at Pimco, but bonds are a miniscule part of Harvard’s portfolio. Outside the ranks of bond specialists, El-Erian was little-known in the financial world. Moreover, El-Erian has no Harvard connection, as Meyer did and Yale’s investment genius, David Swensen, does with his university; El-Erian holds economics degrees from Oxford and Cambridge. His attraction to Harvard—and willingness to take a six-figure pay cut—apparently stemmed from a longstanding interest in the formation of public policy, not loyalty to the university.

Still, El-Erian’s resignation was unexpected; he was coming off an impressive year. In August, he announced a 23 percent return on the endowment. Adding contributions and subtracting fees and distributions, Harvard’s wealth grew from $29.2 billion to $34.9 billion in the fiscal year that ended in June. HMC took a hit in July when it lost $350 million in Sowood, a hedge fund started by former HMC money manager Jeffrey Larson, but that proved a blip in the overall picture.

Things could have been better—Duke, Michigan, the University of Virginia, Northwestern, Notre Dame, and Amherst all weighed in at 25-percent-and-higher returns, and as it has for the past decade, Yale, at 28 percent, led the pack. But given that El-Erian took over and restaffed an HMC depleted by the departure of 30 employees who left with Meyer, the Corporation was delighted with 23 percent. El-Erian is highly regarded by his money managers, impressed alumni, and got along well with new president, Drew Faust, who asked his advice regarding the Allston campus. “To a person, the HMC board”—headed by university treasurer James Rothenberg—“was surprised and disappointed that he was leaving,” says the Harvard official.

So why the sudden exit? “Family reasons,” El-Erian said, and that is apparently true: El-Erian came to Harvard with his wife, Jamie, a self-employed attorney, and a young daughter, Samia. By all accounts, Jamie El-Erian never wanted to move east and vigorously disliked Cambridge; she longed to be near family in California, and apparently was spending up to two weeks a month there. As Samia neared school age, her mother’s desire to escape the cold of Cambridge grew more urgent.

Rothenberg will head the search for a replacement—Faust’s role will be minimal—but it won’t be easy. Finding El-Erian took almost a year, and most of the viable candidates would have to accept an enormous pay cut and considerable public attention: Endowment returns are now watched like Hollywood opening weekends. Harvard’s billions are undoubtedly a blessing. But in ways that no one seems to have expected, they are also becoming something of a burden.