The top-performing university and college endowments in fiscal year 2024 had high exposures to public companies assisting in the artificial intelligence revolution, according to an NEPC report released Jan. 14.
The report — titled “Mega Endowment FY 2024 Trends: David Outperforms Goliath” — analyzed the investment performance of endowments with more than $1 billion in assets over the recent fiscal year ended June 30.
For a second consecutive year, the largest endowments mostly trailed behind their smaller and mid-sized peers — particularly those with more exposure to public equities, wrote Colin Hatton, principal and senior consultant at NEPC’s endowments and foundation practice.
Hatton noted that the 2024 endowment performances reflected the “dramatic gains” in the public equity markets, in which U.S. large-cap technology stocks continue to see strong returns due to the role they have played in the AI boom.
And while “it’s often true that compelling new technologies arise in the private markets first, which is a reason why the mega endowments have historically outperformed,” longstanding, U.S.-domiciled public companies such as Nvidia, Amazon and Microsoft have been responsible for 24.6% of the S&P 500’s gains, Hatton added.
Among the higher-educational endowments analyzed by NEPC, the $1.6 billion University of California-San Diego Foundation generated a 15.5% return, the highest one in 2024. Public market equity accounted for more than 60% of the total portfolio, and produced about 90% of the fund’s total returns.
Similarly, public equities accounted for 65% of the $1.6 billion University of Miami’s endowment, which generated a 14.1% return and ranked No. 6 . The asset class contributed around 85% of the Florida-based university’s total portfolio returns.
Although AI drove strong returns for large-cap U.S. stocks, Hatton noted “we’re not convinced this is a trend with staying power.” He added it may be hard for technology firms to outperform earnings expectations to support high valuation multiples, which have contributed to their gains so far.