Key Takeaways
- • The 17 largest U.S. university endowments grew from $249 billion in FY2016 to $426 billion by FY2025—a 70-73% increase driven by investment performance and philanthropic gifts, according to the 2025 NACUBO-Commonfund Study of Endowments.
- • One-year performance leaders diverge sharply from long-term compounders: Michigan posted the strongest FY2025 return at 15.5%, yet MIT, Michigan, Stanford, Notre Dame, and Duke demonstrate superior ten-year track records, while Harvard—the largest endowment at $57 billion—lags peer group leaders with an 8.2% ten-year return.
- • Five-year annualized returns exceed 12% for Michigan, Stanford, Notre Dame, WashU, and MIT, signaling that mid-sized and well-diversified endowments have outpaced the largest by absolute assets over recent market cycles.
- • The study reveals three distinct allocation philosophies and meaningfully different risk profiles across the peer group, with a structural gap becoming visible only when benchmarked against global institutional peers, suggesting portfolio construction and investment governance drive performance divergence.
Summary
The 17 largest U.S. university endowments have achieved substantial growth over the past decade, expanding their combined assets from approximately $247–249 billion in fiscal 2016 to $426 billion by fiscal 2025. This 70-73% aggregate increase reflects both strong investment performance and continued philanthropic support, demonstrating the resilience and growth potential of large institutional portfolios during a period that encompassed significant market volatility and recovery cycles.
Analysis of individual fund performance reveals a crucial distinction between short-term and long-term return generation. Michigan led the peer group in fiscal 2025 with a 15.5% net return, followed by MIT at 14.8%, Washington University at 14.7%, and Stanford at 14.3%. However, this ranking does not correlate with sustained performance. Over a five-year horizon, Michigan, Stanford, Notre Dame, Washington University, and MIT all exceeded 12% annualized returns. Extending the time horizon to ten years, MIT, Michigan, Stanford, Notre Dame, and Duke emerge as the top performers, while Harvard—despite maintaining the largest absolute asset base at $57 billion—posted the weakest ten-year return among top-five endowments by size at 8.2%. This performance gap suggests that asset scale alone does not guarantee superior risk-adjusted returns and that portfolio construction, investment governance, and allocation discipline are primary return drivers.
The research, conducted by Professor Mila Sherman and her finance class and grounded in the 2025 NACUBO-Commonfund Study of Endowments, individual fund annual reports, and FIS-APT multi-factor statistical risk modeling, identifies three distinct allocation philosophies operating across the 17 endowments. These divergent strategies correlate with materially different risk profiles and return outcomes. The study further reveals a structural performance gap that only becomes apparent when these American endowments are benchmarked against global institutional peers, indicating that U.S. endowment best practices may diverge from international institutional standards in meaningful ways. This finding has implications for asset allocation policy, alternative investment deployment, and the role of active management versus passive indexing in long-term wealth preservation.
Analysis of individual fund performance reveals a crucial distinction between short-term and long-term return generation. Michigan led the peer group in fiscal 2025 with a 15.5% net return, followed by MIT at 14.8%, Washington University at 14.7%, and Stanford at 14.3%. However, this ranking does not correlate with sustained performance. Over a five-year horizon, Michigan, Stanford, Notre Dame, Washington University, and MIT all exceeded 12% annualized returns. Extending the time horizon to ten years, MIT, Michigan, Stanford, Notre Dame, and Duke emerge as the top performers, while Harvard—despite maintaining the largest absolute asset base at $57 billion—posted the weakest ten-year return among top-five endowments by size at 8.2%. This performance gap suggests that asset scale alone does not guarantee superior risk-adjusted returns and that portfolio construction, investment governance, and allocation discipline are primary return drivers.
The research, conducted by Professor Mila Sherman and her finance class and grounded in the 2025 NACUBO-Commonfund Study of Endowments, individual fund annual reports, and FIS-APT multi-factor statistical risk modeling, identifies three distinct allocation philosophies operating across the 17 endowments. These divergent strategies correlate with materially different risk profiles and return outcomes. The study further reveals a structural performance gap that only becomes apparent when these American endowments are benchmarked against global institutional peers, indicating that U.S. endowment best practices may diverge from international institutional standards in meaningful ways. This finding has implications for asset allocation policy, alternative investment deployment, and the role of active management versus passive indexing in long-term wealth preservation.
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