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US university endowments are collectively closing in on $1tn assets under management. While a trillion bucks isn’t quite what it used to be, it’s still a lot of money; and the distributions make important contributions to their sideline of higher education.
That number is from the annual NACUBO-Commonfund Study of Endowments, which dropped today. We picked through the deets to see if there was anything interesting to say beyond gawping at their sheer size.
Popping these funds on a map you can see where asset ownership is concentrated. And concentrated it is, with more than half clustered in just six states — Massachusetts, California, Texas, New York, Pennsylvania, and Connecticut.
The really big individual endowments are associated with the usual suspects (Harvard, Yale, Stanford and Princeton), but there are now thirty-two funds that have over $5bn of assets. And this class of mega-endowment accounts for almost three-fifths of the total universe of university funds.
Do they invest differently to the minnows? The NACUBO-Commonfund Study of Endowments fortunately answers this most pressing of questions.
And the answer is 🥁
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. . . exactly what you’d expect. The bigger the endowment, the greater the allocation to private assets.
You can toggle the filter in our chart below to see how asset allocation varies across different sized endowments, split either by share of fund count or share of total endowment assets. We’ve even included a ‘boring old columns’ option for readers who have enough excitement in their lives without funky Marimekko data visualisations:
Endowments with less than $100mn in assets have held close to 60 per cent of assets in stocks and around 10 per cent in some mix of private equity and marketable alternatives (mostly hedge funds, but also private credit).
Mega-funds, with the economies of scale to employ specialist investment staff, can negotiate better terms with managers — and can therefore do more sophisticated things at a lower cost — tend to have only a quarter of assets in stocks. But they hold over half of assets in private equity and marketable alternatives. Hardly breaking news.
How did this work out for them? Toggle the drop down menu to ping through performance periods.
Over the year to June 30, 2025 the average fund return was pretty much the same across the size distribution. Over three years, the average return falls as the average fund size increases. This likely reflects public markets’ outperformance of private equity etc. Over five and 10 year timeframes, returns to scale emerge — maybe due to those clever internal investment staff adding value with astute private dealmaking, maybe due to the abundance of cheap leverage.
Still, it’s been rare for the average fund of any size to beat a 60:40 portfolio of S&P 500 stocks and Barclays US Aggregate bonds. Which is pretty interesting given how sophisticated US endowments are supposed to be.
The dollar-weighted average allocation to assets classed as equity (including privates and hedge funds) is a little more than three-quarters of assets, so it’s also notable that a 75:25 portfolio of US stocks and bonds has proved unbeatable by size-cohort averages.
But perhaps it’s unfair to measure these funds against a benchmark they didn’t choose. Alphaville has muttered about Reform UK’s habit of doing precisely this when it comes to measuring UK Local Government Pension Scheme administering authorities’ performance. So we should at least be consistent.
According to the NACUBO survey, almost 40 per cent of endowments have an inflation-plus return, and another third have a fixed nominal return target. The average spread above inflation for the real-return-targeters is 4.9 per cent, and the average nominal target is 7.2 per cent per annum. So, if US inflation turns out to be in line with the current US Treasury 10-year break-even inflation rate of 2.3 per cent, 7.2 per cent looks like the magic hurdle rate for most funds.
As MainFT wrote last week, some endowment’s return targets have been far more aggressive than 7.2 per cent. But for the most part, it looks like university endowments across the size distribution have done well versus their targets.
Even if they could’ve crushed it by simply buying a balanced index fund.