University endowments post best returns since 2021 on SpaceX and AI bets

what happened

According to The Wall Street Journal, US university endowments recorded their strongest annual returns in five years, helped in part by stakes in SpaceX and other AI-related investments. Harvard reported a 27.1% gain for the fiscal year ended June 30, lifting its endowment to almost $68 billion. The University of North Carolina system gained 37.8%, roughly half of that from SpaceX, while Washington University in St. Louis rose 37.3%.

Preliminary data from Cambridge Associates put the median endowment return at 16.1%. A benchmark portfolio of 70% global stocks and 30% high-quality US bonds gained 17.9%. Results were also lifted by the fiscal 2021 peak, when some returns topped 50%.

Endowment executives said SpaceX was among the most widely held holdings, and its record IPO was one of the biggest windfalls for these funds. Its market value has fallen from the post-IPO peak, but its much higher valuation in recent years kept returns strong.

why it matters

For markets, the results show how much university endowments depended on a single company and on concentrated AI bets, which makes their performance highly sensitive to individual holdings. Fund leaders themselves warn that one year is not a reliable guide and that long-term results matter more. Harvard also faces a higher tax on net investment income, rising from 1.8% to 8% in fiscal 2027, which it estimates would cost about $300 million a year.

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