Big Endowments Double Down on Alternatives — Evening Brief – 02.13.26
In a year defined by high‑profile funding clashes between Washington and elite universities, the biggest U.S. endowments leaned harder into private markets while being asked to do more for campus budgets. The latest NACUBO‑ Commonfund data show the largest funds boosted their allocation to alternatives to 62.5% and delivered the highest annualized gains of 11.8%, even as liquidity questions swirled.
Across 657 colleges, universities and affiliated foundations, 10‑year average annual returns improved to 7.7% in FY25 from 6.8% a year earlier, while one‑year performance eased slightly to 10.9% from 11.2% in FY24. “This year’s report shows how important well‑managed endowments are to colleges and universities,” said NACUBO President and CEO Kara Freeman.
Spending needs are rising faster than new money coming in. Institutions withdrew $33.4 billion from their endowments in FY25, an increase of more than 17% over the past two years. Freeman said that “additional spending” supported “students, faculty, staff, research and operations.” At the same time, new gifts declined 9.2% to just under $14 billion, pushing investment returns to the center of long‑term funding strategies.
Allocations to alternatives scale sharply with size. Funds holding $251 million to $500 million in assets—the median cohort—allocated 32.3% to alternatives, while institutions with less than $50 million devoted just 12.5%.
“Over longer periods of time, private/alternative strategies have proven to add value to endowment portfolios,” said George Suttles, executive director of the Commonfund Institute. “The larger point is that endowments that are well diversified are better positioned for long‑term success in the ever‑changing conditions found in global financial markets.”
On a dollar‑weighted basis across all participants, private equity represented the largest allocation at 16.8%, followed by marketable alternatives at 15.4%, U.S. equities at 13.7% and venture capital at 12.2%.