Student walking across a grass field in front of the Bible building at Abilene Christian University.
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While universities like Harvard and Yale carry around endowments that are larger than some small countries' economies, this bull market has provided an environment in which their market performance can be rivaled by nimble collegiate counterparts lacking their vast resources and donor networks.
Yale University's $44 billion endowment, a close comp to Nepal's GDP, has returned 9.4% over the past decade through June 2025 — good, but not good enough to beat Abilene Christian University, a private Christian university in Abilene, Texas, and its 11.4% over the same period, which recently led it to surpass the $1 billion in assets milestone.
Through June 2026, ACU's 10-year return climbed to 13.6%, against 9.1% for a benchmark of 70% global stocks and 30% bonds, according to data provided by the school. But it's more than just a good year: ACU's 20-year 10.9% average through June 2026 is well above its 6.8% benchmark.
For many schools, this is the period (September to November) when fiscal year investment performance is released, but not all information is released at the same time. Yale, for instance, has yet to publish its 2026 numbers. The most-cited annual study of hundreds of endowments, the NACUBO-Commonfund Study of Endowments, will be published in February 2027 for FY 2026 performance data.
Joe Lee, president and chief investment officer of ACIMCO (Abilene Christian Investment Management Company), a university-controlled investment company that manages the school's portfolio, said that many small, but good, sound decisions early on, years ago, have compounded over time.
"We do the standard stuff that other endowments do," Lee said, pointing to a philosophy that is equity-oriented, incorporates super long time horizons, and employs good managers and diversification techniques.
But he also said being small can be an advantage, "if you lean into the advantages of a smaller endowment," Lee said. Larger endowments have fund-sized thresholds below which they are not worth their time.
"We can look at a $100 million fund and get excited about it and get something material," Lee said.
ACU's endowment of a little over $1 billion, as of the end of its most recent fiscal year on June 30, 2026, compares to a Yale endowment valued at $44.1 billion in Yale's most recent disclosure (FY 2025).
Yale did not respond to requests for comment.
ACIMCO, while not unique in higher education, is an asset to portfolio management.
"We have a great structure," Lee said, adding that having a separate university-owned management company — as opposed to an outside firm — manage the school's portfolio allows it to have a much longer time horizon.
It also lets the school move faster, Lee said, crediting a dedicated investment committee and a board he described as forward-thinking and open-minded, with critical thinking at the right moments. Good governance matters, he said, as does not going after short-term results.
Despite the advantages to which Lee speaks, the shift to the outsourced CIO model which picked up a decade ago has accelerated over the past five years, according to Anna Dunn Tabke, founder of Leita Advisory, which runs searches that help colleges and foundations pick outsourced chief investment officers. "An in-house CIO is expensive, and even if a school can afford one, that one person can't do everything. They need a team and often outside manager research and due diligence," she said.
Hiring an OCIO can also allow schools to pool their money with other institutions and help to invest competitively alongside larger endowments.
Lee said after interviewing 20 outside managers of investment funds, they all sound smart, aligned and insightful, and "at the end of the day you are betting on people."
It's a pattern-recognition business, he said, with skill, high integrity, alignment and earning their fees all table stakes.
The ACU portfolio is not simply stocks and bonds. A little more than half of the endowment is in private investments and a little less than half is in public markets, Lee said. Privately held equity and publicly traded equity returned similar amounts for ACU in fiscal 2026, he said, adding that it's hard to credit the return to one side or the other because the public portion includes cash, which earns very little.
The endowment also comes with strings attached. The university has a mission of drawing upon the endowment to benefit current and future students, and there are also many stipulations on the money, as some is bequeathed by donors with certain conditions, such as funds that go only to chemistry majors or underprivileged students.
ACU isn't the only small school outperforming far larger rivals in terms of portfolio performance.
Reed College, a Portland, Oregon liberal arts school with an endowment of $885 million, reported returns of 7.5%, 12.4% and 11.6% over the past three fiscal years through June 2025, ahead of Yale's 1.8%, 5.7% and 11.1% in the same years, according to each school's reports. Reed says it has also beaten a traditional 60/40 stock-and-bond portfolio and the median college endowment, as tracked by Cambridge Associates, an investment consulting firm, over the past five and 10 years.
Colby College, a liberal arts school in Waterville, Maine, reported an 18.2% return for the year ended June 30, 2026, and a 10.5% annualized return over the past 10 years, net of manager fees, according to data provided by the school. Its endowment was $1.4 billion as of June 30, 2026. A year earlier, Colby's 10-year annualized return was 8.5%, below the 9.4% Yale reported for the same period but ahead of Harvard's 7.7% and Columbia's 7.8%. Colby said no single company contributed more than 1% to last year's return.
Deborah Shufrin, associate vice president and chief investment officer of Colby College, credits the school's long-term relationships as being a factor in its competitive returns.
"Colby's returns have been competitive with much larger institutions in large part due to early/long-standing relationships with premier private fund managers as well as the ability to identify and access newer emerging top-tier private funds," Shufrin said, adding that these relationships enable Colby to take advantage of its perpetual life and long-term investment horizon.
Donors also play a role. Matt Proto, senior vice president at Colby, said the school's Dare Northward fundraising campaign has paid for new academic programs and facilities, financial aid, athletics and the redevelopment of downtown Waterville. "Many gifts enhanced the endowment, several launched new programs and facilities, and others supported annual operations," Proto said.
The David v. Goliath investing edge may not last for all
Not everyone agrees the edge is as clear as the numbers suggest.
Tabke said comparisons between small endowments and giants like Yale need care, because the time periods may not match. She noted the fact that some schools have already reported results through June 30, 2026, while Yale's 10-year figure runs only through June 2025. She says that one-year gap matters a lot right now.
Using a database from Confluence, an investment data provider of 259 small and mid-sized endowments and foundations, with an average portfolio of $220 million, she said the bar for ranking among the top 5% over 10 years was about 8.45% a year as of June 2025, a level Yale topped. A year later, it had jumped to roughly 10.5%, with the middle of the pack at 8.65%. In other words, the typical 10-year return rose almost two points in a single year. Last year's results were also unusually scattered: the best-performing 5% of schools earned nearly 19.5%, while the bottom 5% earned under 4%, roughly double the gap of the year before.
Despite Abilene's CIO noting that its returns from private funds — which comprise a little over half of its investments — were on par with returns from public market investments, Tabke said that private equity, a favorite of big-endowment investors, has paid out little and returned little for about three years, while schools with simpler, stock-heavy portfolios, especially large U.S. tech companies, pulled ahead. Then a few schools that invest like Yale, some through outsourced managers, held shares in SpaceX when it went public in June, which lifted their returns. One year like that, she said, can move a 10-year number noticeably.
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Smaller schools will also more frequently run up against illiquidity issues which limit the risks they are able to take across markets.
"Smaller schools generally can't take on Yale's level of illiquidity. Yale's endowment is the product of more than 300 years of gifts, and Yale and peers like Princeton can also draw on fundraising and debt alongside endowment spending and tuition," Tabke said.
"Concentration is a risk at any size: a stock-heavy portfolio can depend on a few large tech companies, and a large SpaceX position is a concentration of its own," Tabke added, noting that resources are the other constraint.
Timing is a big part of the story, according to R. Keith Sauls, CFA, who heads the higher-education endowment and foundation group at Farther Finance, a wealth management firm and the immediate past chair of the College of Charleston Foundation, where he also chaired the investment committee.
The recent edge for small schools is real, Sauls said, but he added that staying out of investments that are hard to sell quickly can help make them look nimble and contribute to beating bigger peers recently. Over time, though, he said larger endowments generally come out ahead by about one to 1.5 percentage points a year, which he described as the payoff for tying money up in those investments.
Sauls said big endowments hold a lot of venture capital and private equity, which aren't revalued often, while the stock market surged, and some of the smaller schools' lead was timing, not a better model or better access. For example, when a fiscal year ends, and whether it catches a crash or a rally, can swing three-, five- and 10-year results, he said.
In the meantime, one might want to head to Abilene Christian University and sign up for FIN 411, Principles of Investment.
"The model being used matters because it can override the limitations of being a smaller endowment," Sauls said.