Key Takeaways
- • The 657 higher education endowments surveyed in the 2025 NACUBO-Commonfund Study, collectively managing $944.3 billion, reported an average 10.9% return for fiscal 2025, with a 7.7% annualized 10-year average return.
- • Endowments raised their spending from investment pools, with endowments providing an average of 15.2% of operating budgets in fiscal 2025, up from 14% in 2024 and 10.9% in 2023.
- • Alternative investments made up 54.5% of endowment assets on average, with private equity holding the largest average allocation at 16.8%.
- • Global equities and developed non-U.S. passive strategies were the top performers, each returning about 17% during the fiscal year.
- • Commonfund's George Suttles noted that endowments with heavier public equity allocations have recently outperformed those with heavy alternatives allocations, while Wilshire's Rob Appling argued manager selection in private markets is becoming more decisive.
Summary
Higher education endowments posted another year of solid gains in fiscal 2025 as strong equity markets lifted returns, even as institutions drew more heavily on their investment pools to stabilize operations. According to the 2025 NACUBO-Commonfund Study of Endowments, the 657 institutions surveyed by the National Association of College and University Business Officers and asset manager Commonfund, which together manage $944.3 billion, reported an average net return of 10.9% for the year. Average net annualized returns were 10.0% over three years, 10.2% over five years, 7.7% over 10 years, 8.5% over 15 years, 7.3% over 20 years and 6.6% over 25 years.
The highest returns came from actively and passively managed global equities and passively managed developed non-U.S. markets, which each returned about 17%. The study also cited strong private market returns and the best fixed-income returns in years, with gains evident across institutions of all sizes. Alternative investments, including private equity, largely recovered after several weak years following the COVID-19 pandemic.
Alternatives remain a large share of endowment portfolios. The study reports that alternatives accounted for 54.5% of assets, public equities 31.5%, fixed income 11% and other investments 3%. Private equity had the largest average allocation at 16.8%, followed by marketable alternatives at 15.4%, U.S. equities at 13.7%, venture capital at 12.2% and fixed income at 10.7%. Commonfund Institute executive director George Suttles noted that endowments with higher public equity allocations have outperformed heavy alternatives allocators in recent years, while adding that private strategies have proven to add value and that diversification supports long-term success. Wilshire Associates managing director Rob Appling said manager selection is becoming more critical in private markets, citing a widening gap between top- and bottom-quartile private equity managers as more capital chases fewer deals.
Endowment spending rose as institutions leaned on these pools. Endowments supplied an average of 15.2% of operating budgets in fiscal 2025, up from 14% in 2024 and 10.9% in 2023. The two largest cohorts, those with $1 billion to $5 billion and those above $5 billion in assets, contributed 18% to 19% of operating budgets. NACUBO president and CEO Kara D. Freeman said the additional spending supported students, faculty, research and operations amid economic challenges. Meketa Investment Group managing principal Laura Wirick noted that institutions face federal funding cuts, investment tax increases tied to the One Big Beautiful Bill Act, liquidity concerns and declining enrollment, even as investment performance has been a bright spot.
The highest returns came from actively and passively managed global equities and passively managed developed non-U.S. markets, which each returned about 17%. The study also cited strong private market returns and the best fixed-income returns in years, with gains evident across institutions of all sizes. Alternative investments, including private equity, largely recovered after several weak years following the COVID-19 pandemic.
Alternatives remain a large share of endowment portfolios. The study reports that alternatives accounted for 54.5% of assets, public equities 31.5%, fixed income 11% and other investments 3%. Private equity had the largest average allocation at 16.8%, followed by marketable alternatives at 15.4%, U.S. equities at 13.7%, venture capital at 12.2% and fixed income at 10.7%. Commonfund Institute executive director George Suttles noted that endowments with higher public equity allocations have outperformed heavy alternatives allocators in recent years, while adding that private strategies have proven to add value and that diversification supports long-term success. Wilshire Associates managing director Rob Appling said manager selection is becoming more critical in private markets, citing a widening gap between top- and bottom-quartile private equity managers as more capital chases fewer deals.
Endowment spending rose as institutions leaned on these pools. Endowments supplied an average of 15.2% of operating budgets in fiscal 2025, up from 14% in 2024 and 10.9% in 2023. The two largest cohorts, those with $1 billion to $5 billion and those above $5 billion in assets, contributed 18% to 19% of operating budgets. NACUBO president and CEO Kara D. Freeman said the additional spending supported students, faculty, research and operations amid economic challenges. Meketa Investment Group managing principal Laura Wirick noted that institutions face federal funding cuts, investment tax increases tied to the One Big Beautiful Bill Act, liquidity concerns and declining enrollment, even as investment performance has been a bright spot.
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