A number of big US university endowments are on track to match or outpace the broad stock market, as large weightings in tech groups such as Space X and Open AI help them snap several years of underperformance. According to Cambridge Associates, a handful of endowments are expected to "significantly outperform" the S&P 500 index, which jumped more than 20 per cent in the 12 months to June 30. Funds benefited from exposure to "a small number of very successful private companies", said Margaret Chen, global head of the endowment and foundation practice at the consultancy, adding that the median return would be "very strong".

Endowments held the positions either directly or through private equity managers. Performance for the year for most endowments has not yet been publicly reported, in part due to the time it takes for some private assets to be valued. "It is shaping up to be a standout year for institutions with exposure to a few major private-market winners," said Chen. Matching or beating the returns of the broad US stock market can be notoriously difficult for active fund managers in public equities, with most delivering below-market performance over the longer term.

The strong performance by some endowments marks a return to a longer-term pattern in which large endowments have tended to benefit from a hefty exposure to private equity that many expanded in the wake of the 2008 global financial crisis. These allocations have weighed on performance in recent years as private market valuations fell after the 2021 boom and then recovered more slowly than public equities. A lack of initial public offerings and acquisitions also choked off distributions to investors, adding to the pressure on endowments heavily exposed to private markets.

The strong performance by some endowments marks a return to a longer-term pattern © Michael Nagle/Bloomberg Endowments with more than $5bn assets returned an annualised 7.8 per cent in the three years to June 2025, according to a study by the National Association of College and University Business Officers and Commonfund, compared with an annualised 19.7 per cent for the S&P 500 over that period. But that dynamic has reversed this year as the blockbuster listing of rocket conglomerate Space X and soaring valuations of AI start-ups such as Open AI and Anthropic delivered a windfall to endowments that had invested in the companies early on, either through private equity firms or alongside them. There have been schools that have been beaten up over the last several years because of their private exposure, said Chris Bittman, a partner at Cerity Partners that manages capital for endowments including the University of Colorado Foundation.

This year you'll probably see . . . return[s] from historical outperformers back at the top of the charts again because of some of the technology names. Harvard University's endowment held about $2.2bn worth of Space X shares as of June 30, its largest ever single public equity holding, which has generated a significant investment gain, according to regulatory filings and people with knowledge of the matter. Its stakes in high-profile technology start-ups could give a big boost to its performance this year, according to people with knowledge of the endowment.

That would mark a reversal from 2025, when its chief executive NP Narvekar said performance was "dampened by having less public than private equity", with private equity accounting for 41 per cent of its assets. Harvard declined to comment.