Mega Endowment FY 2023 Returns: Return to the Mean

By Colin Hatton, NEPC, an AGB Event Sponsor March 7, 2024 Blog Post

Opinions expressed in AGB blogs are those of the authors and not necessarily those of the institutions that employ them or of AGB.

University endowment staffs breathed a sigh of relief in fiscal year 2023 as global investment markets bounced back from a gloomy 2022. Despite the good market news, however, many mega endowmentsi posted results that lagged behind smaller institutions. This represented a significant reversal of fortune, as larger institutions have consistently outperformed their smaller counterparts over the past several years.

The key ingredient in this performance trend has been the role of private equity and venture capital in mega endowment portfolios. For multiple years, the largest institutions have benefitted from larger allocations to private investment opportunities. However, public markets raced ahead of private markets in 2023, adding value to the smaller institutions that tend to have more of their portfolios invested in them.

Public vs. Private

In the most recent fiscal year, private equity drastically underperformed public markets. At the start of the fiscal year, mega endowments—those with greater than $1 billion in assets under management, or AUM, as tracked by NEPC at the time of this writing—had approximately 15 percent in venture capital and 18 percent in private equity. Endowments with $100 million to $250 million in AUM, where the median National Association of College and University Business Officers (NACUBO) respondent sits, had only 9 percent in private equity. Meanwhile, public U.S. equities—the top-performing asset class—occupied less than 9 percent of the average mega endowments and more than 28 percent of the average $100 million to $250 million endowments.

Several factors fueled public market outperformance. The overall economic backdrop in 2023 was significantly better than in 2022. Inflation receded, employment trends were positive, and corporate earnings improved after midyear. Importantly, the Federal Reserve indicated plans to lower interest rates in 2024.

In addition, the release of ChatGPT in November 2022 drove an artificial intelligence (AI)-fueled rally. Initially, that rally was concentrated on the largest U.S. technology firms that have developed AI models, and mega-cap stocks that are benefiting from AI applications. But by year-end, the rally had spread more broadly.

Meanwhile, private markets lagged. This isn’t a surprise—private equity valuations tend to be smoother than those of the public markets. They held their value better as public markets sank in 2022 and subsequently, they did not participate fully on the upside in 2023. It is also true that rising interest rates in 2023 were particularly problematic for highly leveraged buyout and venture capital valuations. In other words, after multiple years of dramatic gains, private equity performance is returning to the mean.

The fixed-income market was a mixed bag in the public and private spaces. With the economy improving, credit opportunities posted strong gains, particularly in the high-yield space. However, interest rates rose over the course of the year, driving the fixed-income aggregate index to a slightly negative return.

Looking Forward

The past two years provide a stark reminder that markets tend to revert to the mean, and align with long-term trends, over time. The trends in FY 2023 were less an indictment of private equity and venture capital than an indication that their valuations had raced too far ahead of the public markets. Based on a variety of metrics, it also appears that the strong returns by public markets, particularly the U.S. large-cap equity segment, have pushed their valuations toward the higher end of their historical range.

Both areas produced strong returns during the ultra-low interest rate environment of 2020–2022. But while the music is no longer as loud and returns may be muted for the next few years, we believe innovation will continue and those financing it will be rewarded—especially those who stick to their pacing and maintain discipline around strategy and vintage-year diversification.

The trends in FY 2023 also reinforce the importance of diversification in endowment portfolios. The ideal endowment portfolio targets some form of spending-plus-inflation return, with limited volatility. At NEPC, we continue to believe that diversification and long-term vision are excellent tools to achieve those goals even though performance of various asset classes may ebb and flow over time.

(12 MONTHS ENDING JUNE 30, 2023)

Rank Institution Returns (%) Asset ($B)
1 UC San Diego Foundation 11.3% 1.4
2 University of Miami** 10.9% 1.5
3 University of Wisconsin–Madison 10.5% 3.8
4 University of Nebraska Foundation 9.8% 1.7
Investment Metrics All Endowment Median 9.6% NA
5 Carleton College 9.3% 1.2
6 University of Illinois Foundation 9.0% 2.6
7 University of California Endowment 8.8% 23.4
8 Syracuse University 8.6% 1.9
9 University of Arkansas Foundation 8.2% 2.4
9 Trinity University 8.2% 1.7
11 University of Colorado Foundation 7.8% 2.6
12 Lehigh University 7.5% 2.0
13 Case Western Reserve Univ. 7.0% 2.3
13 University of Minnesota Foundation 7.0% 3.3
13 UCLA Foundation 7.0% 5.1
16 University of Rochester 6.9% 3.3
16 Ohio State University 6.9% 7.4
16 Michigan State University 6.9% 4.1
19 Baylor University 6.4% 2.0
20 University of Houston System 6.2% 1.0
21 University of Washington 6.0% 4.9
22 University of Utah 5.9% 1.5
23 Texas Tech University System* 5.6% 1.8
24 Iowa State University Foundation 5.5% 1.4
25 Texas A&M Foundation 5.4% 2.8
25 Rochester Inst. of Technology 5.4% 1.3
27 Claremont McKenna College 5.2% 2.1
27 University of Michigan 5.2% 17.9
27 University of Florida 5.2% 2.3
30 Brandeis University 4.9% 1.2
31 Bucknell University 4.8% 1.1
32 Columbia University 4.7% 13.6
32 UTIMCO* 4.7% 54.1
34 University of Kansas 4.5% 2.2
35 Stanford Management Co. 4.4% 40.9
36 Arizona State University Foundation 4.3% 1.5
37 Amherst College 4.1% 3.3
38 Pennsylvania State University 3.9% 4.5
39 University of Missouri System 3.8% 2.2
40 Cornell University 3.6% 10.0
41 Tufts University 3.5% 2.4
42 Tulane University 3.3% 1.6
42 University of Chicago 3.3% 10.0
44 Carnegie Mellon University 2.9% 3.1
44 Harvard University 2.9% 50.7
44 Williams College 2.9% 3.5
44 Middlebury College 2.9% 1.5
48 Brown University 2.7% 6.6
49 University of Oregon Foundation 2.5% 1.5
50 University. of Virginia Investment Management Co. 2.0% 13.6
51 Yale University 1.8% 40.7
51 Kansas State University Foundation 1.8% 1.0
53 Dartmouth College 1.6% 7.9
54 University of Pennsylvania 1.3% 21.0
55 North Carolina State Investment Fund 1.2% 1.7
56 Bowdoin College 0.6% 2.4
57 University of North Carolina -0.4% 10.1
58 Duke University -1.0% 11.6
59 Princeton University -1.7% 34.1
60 Vanderbilt University -2.0% 9.7
61 Washington University in St. Louis -2.3% 12.5
62 Massachusetts Institute of Technology -2.9% 23.5

*Fiscal year ended Aug. 31, 2023
**Returns not publicly available, provided directly to NEPC by organization. Sources: Investment Metrics, respective endowment press releases

Trailing 12-month return for period ending June 30, 2023

One-Year Return
Large-Cap U.S. Equity
S&P 500
Non-U.S.-Developed Equity
Global Equity
Small-Cap U.S. Equity
Russell 2000
Bloomberg Barclays High Yield
Hedge Funds
HFRI Composite
Private Equity
C/A Global All Private Equity
EM Equity
US Core Bonds
Bloomberg U.S. Aggregate
Venture Capital
C/A VC Index
Bloomberg Commodity Index
Real Estate

Important disclosures

Past performance is no guarantee of future results.

All investments carry some level of risk. Diversification and other asset allocation techniques do not ensure profit or protect against losses.

This report should not be considered customized investment advice. Please contact NEPC for advice specific to your investment program.

The information in this report has been obtained from sources NEPC believes to be reliable. While NEPC has exercised reasonable professional care in preparing this report, we cannot guarantee the accuracy of all source information contained within.

The opinions presented herein represent the good faith views of NEPC as of the date of this report and are subject to change at any time.

Colin Hatton is senior consultant, endowments and foundations, NEPC.


i NEPC classifies a “mega endowment” as any endowment that meets or exceeds $1 billion in assets. Information for this report was gathered by analyzing publicly available data and public news releases that have been published prior to December 31, 2023. NEPC’s mega endowment list does not reflect data from institutions that do not provide readily available public returns, have not published their data prior to NEPC’s cutoff date, or do not meet or exceed the $1 billion threshold based on the 2022 NACUBO-TIAA Study of Endowments or prior versions of this list.

With Thanks to AGB Event Sponsor: NEPC

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