University of Michigan Endowment Performance: A Deep Dive
The University of Michigan's endowment has garnered significant attention due to its impressive performance and strategic investment approach. This article delves into the factors contributing to the endowment's success, its investment strategies, and its overall impact on the university's mission.
Recent Performance Highlights
In 2025, the $21.1 billion University of Michigan endowment achieved a notable 15.5 percent gain, placing it among the top performers in the annual endowment league tables. This performance was highlighted in a report by executive recruiter Charles Skorina. While the $1.8 billion University of Massachusetts Foundation topped the list with a 15.9 percent gain, Michigan's performance underscored its strong investment strategies. Bowdoin College’s $2.9 billion endowment, came in at 15.3 percent.
Long-Term Success and Ranking
After its performance, the University of Michigan is now ranked fifth in terms of ten-year performance. Over the past ten years, the university's long-term investment portfolio has seen an annualized return of 9.8% since the university established a separate investment office. This consistent growth underscores the effectiveness of the university's investment strategies.
Key Players
Lundberg has won a number of industry awards, and in 2024 he was named Endowment CIO of the Year at the Institutional Investor Allocators’ Choice awards. Other key players in the endowment world include Jon Gibbons, chief investment officer at UMass, who joined the endowment in 2017, and Jane Dietze, chief investment officer at Brown University, who joined in 2018. Phil Zecher, CIO of Michigan State University, has also been instrumental in boosting his institution's showing in recent years.
Comparison with Peers
Michigan is now also the second-largest endowment among the top performers. The only one bigger is the Massachusetts Institute of Technology, with $27.4 billion in assets. It earned 14.8 percent last year, and ranks third in terms of ten-year annualized performance at 10.7 percent. Brown University has gained 11.4 percent annually over ten years and was up 11.9 percent last year. Bowdoin came in second in terms of ten-year performance, gaining 11 percent annually. Another endowment that has boosted its showing in recent years is Michigan State University. Now it’s fourth in the ten-year ranking with a 10 percent annualized gain and a 10.7 percent gain in 2025.
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However, some of the most prominent - and largest - endowments have faltered lately. The Yale University endowment gained 11.1 percent last year and 9.4 percent annualized over ten years, ranking it 17th in the long-term ranking. Meanwhile, the Stanford University endowment gained 14.3 percent last year but is up only 9.4 percent annually over the past ten years, coming in fourteenth over that period. Harvard’s endowment gained 11.9 percent last year and 8.2 percent over the ten-year period.
Investment Strategies and Asset Allocation
The report suggests a significant portion of the University’s endowment falls into the “Alternative Assets” category. Investments in long or short stocks, distressed debt, venture capital, private equity, real estate, natural resources and alternative energy strategies fall into this category.
MPI connected Michigan’s success to increased investments in artificial intelligence and cryptocurrencies. In 2018, the University committed $3 million to Andreessen Horowitz - a venture capital firm - for a crypto fund and increased its commitment in 2019. Simultaneously, the University has been expanding its stake in AI equities: In 2022, the University announced its limited partnership with Altman Capital in a venture fund focused on AI-driven technology companies. Reports from 2023 and 2024 showed the University directly invested in OpenAI or OpenAI-investment structures. The University’s investment in OpenAI is labelled as an “alternative energy strategy,” with the University’s Investment Office taking direct ownership in businesses to actively enhance their value.
The Role of AI and Tech Investments
“All endowments that have been investing in tech are going to do better on average,” Thummel said. “At the end of the day, AI is probably the next industrial revolution. And I do not think that is a crazy statement. If you take the total addressable market of the entire service economy, people are trying to claim that’s where AI can get to now. The whole (total addressable market) of what AI can touch is trillions and trillions of dollars. “They absolutely should be taking on some risky assets,” Thummel said. “Even if these businesses are somewhat expensive right now, the probability that AI gets to where it needs to be sooner rather than later is still positive. And then these businesses will realize even more value. If I take on a risk by buying Delta Air Lines I know cash flows will grow with demand for this, but if I make an AI agent that can be my executive assistant, for example, the value is huge.
“In the short term, we should act like it’s going to do everything,” Thummel said. “In the long term, it probably will. I mean, we’re literally replicating intelligence. So there’s really nothing else that’s going to be as impactful as this.
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Long-Term Investment Perspective
University endowments are typically long-term investors. They allocate capital towards stocks, bonds and more financial contracts over periods of five to 10 years. “To be a long-term investor, investing with durations of five to 10 years out, what you’re looking for is high-quality AI businesses that operate through cycles,” Kodumuru said. “The way to think about this is it is very important to get away from the hype and really understand which management teams are performing well and put capital behind that.
“I would not say they are not chasing trends,” Thummel said. “They know where value is. Our Managing Director of our endowment is incredible. He’s very tech-forward. As an endowment director as well, you’re managing really important money. These are people’s tuition, all the donations. You’re not going to take too much risk, and I think our endowment understands that.
Contribution to the University's Mission
“Our endowment contributes hundreds of millions of dollars each year in support of the university’s mission as a public research institution and health care provider,” said Geoffrey Chatas, executive vice president and chief financial officer. The university’s endowment is a collection of about 13,500 separate funds.
Benchmarking Against Market Indices
That said, over the past ten years, endowments would have done better with an S&P500 index fund. Looking at the trailing 12 months ending June 30 - the end of the fiscal year for the endowments - the S&P 500 gained 13.65 percent annually over ten years and last year returned 15.16 percent. The top endowments did outperform a 60/40 mix of bonds and stocks, which were up only 9.01 percent annually during the past decade and 11.62 percent last year.
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