Have you ever wondered why a relatively modest university in Texas keeps beating the returns of institutions whose endowments could fund small nations? I found myself asking that exact question when the latest fiscal year numbers started circulating. Abilene Christian University, sitting just over the $1 billion mark, has delivered decade-long results that leave several Ivy League powerhouses looking ordinary. The story is not about luck. It is about deliberate choices that smaller schools can actually make while the giants sometimes get stuck in their own scale.
How a Texas School Quietly Outran the Endowment Titans
College endowments usually roll out their fiscal year numbers between September and November. This season the data revealed something that keeps surprising observers. Smaller funds are not just holding their own against Harvard and Yale. In more than a few cases they are outright winning. Abilene Christian University offers the clearest recent example.
Yale’s endowment sits near $44 billion. Over the ten years ending June 2025 it returned 9.4 percent annually. Abilene Christian posted 11.4 percent over the same stretch. Update the numbers through June 2026 and the gap widens further. ACU’s ten-year annualized return reached 13.6 percent while a simple 70 percent global stocks and 30 percent bonds benchmark managed only 9.1 percent. Stretch the view to twenty years and ACU still shows 10.9 percent against a 6.8 percent benchmark. Those are not rounding errors. They are the product of consistent process.
Joe Lee, who serves as president and chief investment officer of the university-controlled management company, puts it simply. Many small but sound decisions made years earlier have compounded. The philosophy itself is familiar: equity-oriented, long time horizon, careful manager selection, and genuine diversification. The difference appears in how a smaller pool can lean into advantages that larger pools cannot easily copy.
Why Size Sometimes Becomes a Handicap
Larger endowments often face practical thresholds. A fund under a certain size simply is not worth the time of their teams. Lee notes that a $100 million opportunity can still move the needle meaningfully for ACU. For a $40 billion-plus portfolio the same check barely registers. That flexibility lets smaller programs access managers and strategies the giants have already outgrown.
Having an in-house investment company adds another layer. ACIMCO is university-owned rather than an external firm. The structure supports a longer time horizon and faster decision-making. A dedicated investment committee and a board willing to think critically at the right moments help keep short-term noise from driving policy. Good governance matters more than most outsiders realize.
I’ve found that the combination of control and agility often gets overlooked when people compare raw size. Prestige and assets under management dominate the headlines, yet the quieter programs sometimes execute with fewer layers of friction.
The Outsourced CIO Trend and Its Trade-Offs
Over the past five years many institutions have accelerated the shift toward outsourced chief investment officers. An in-house CIO is expensive. Even when a school can afford the salary, one person cannot cover every function. Outside research, due diligence, and operational support become necessary. Pooling assets through an OCIO can also help smaller schools invest alongside larger peers.
Lee remains skeptical of the pure outsourced model for ACU. After interviewing roughly twenty external managers, he observed that most sound smart, aligned, and insightful. At the end of the day the decision reduces to betting on people. Pattern recognition, skill, integrity, and genuine alignment become the real filters. Fees are simply table stakes.
Perhaps the most interesting aspect is how the in-house approach preserves institutional memory. When the same team lives with the portfolio year after year, compounding knowledge can outweigh the theoretical benefits of broader access.
What Actually Sits Inside the Portfolio
ACU’s endowment is not a simple stock-and-bond mix. A little more than half sits in private investments. The remainder lives in public markets. In the most recent fiscal year, privately held equity and publicly traded equity delivered similar returns. Cash inside the public sleeve dampens the overall public figure, so the comparison is never perfectly clean. Still, the balance shows intentional design rather than accidental concentration.
Donor restrictions add another layer of complexity. Some gifts support only chemistry majors or underprivileged students. The university must draw on the endowment to benefit both current and future students while respecting those constraints. That reality forces discipline. You cannot chase every shiny opportunity when large portions of capital carry specific mandates.
Other Smaller Schools Posting Strong Numbers
Abilene Christian is not alone. Reed College in Portland reported returns of 7.5 percent, 12.4 percent, and 11.6 percent over the three fiscal years ending June 2025. Yale’s corresponding figures were 1.8 percent, 5.7 percent, and 11.1 percent. Reed also beat a traditional 60/40 portfolio and the median college endowment tracked by consultants over five- and ten-year periods.
Colby College in Maine posted an 18.2 percent return for the year ended June 30, 2026, and a 10.5 percent annualized return over the prior ten years net of fees. Its endowment stood at roughly $1.4 billion. A year earlier its ten-year number sat at 8.5 percent, still ahead of Harvard and Columbia even if it trailed Yale slightly. No single company contributed more than one percent to the most recent year’s result, which points to broad rather than concentrated success.
Deborah Shufrin, Colby’s chief investment officer, credits long-standing relationships with premier private fund managers and the ability to identify emerging top-tier funds. Those relationships let the school take advantage of its perpetual life and long investment horizon. Fundraising campaigns have also expanded the endowment while supporting academic programs, facilities, and financial aid.
Why the David-Versus-Goliath Edge May Not Last Forever
Not every observer believes the current outperformance will continue indefinitely. Comparisons between small endowments and the largest players require careful timing. Some schools have already reported through June 2026 while Yale’s widely cited ten-year figure still ends in June 2025. That single-year gap matters right now.
Data from a sample of 259 small and mid-sized endowments and foundations showed the top-five-percent threshold over ten years sitting near 8.45 percent as of June 2025. A year later the same threshold had climbed to roughly 10.5 percent, with the median near 8.65 percent. In other words, the typical ten-year return rose almost two full points in a single year. Dispersion also widened dramatically. The best five percent earned nearly 19.5 percent while the bottom five percent earned under four percent—roughly double the previous year’s gap.
Private equity, a favorite of the largest endowments, has delivered modest distributions and muted returns for about three years. Schools that stayed heavier in public equities, especially large U.S. technology names, pulled ahead. A handful of institutions that held SpaceX before its public listing in June saw an extra lift. One strong year can move a ten-year average more than most people expect.
Smaller schools also face genuine liquidity constraints. They generally cannot accept the same level of illiquidity that Yale or Princeton can tolerate. Those institutions draw on centuries of gifts, ongoing fundraising, and debt capacity in addition to endowment spending and tuition. Concentration risk exists at every size. A stock-heavy book can depend on a few large technology companies. A sizable position in a single private company creates its own form of concentration.
Timing, Model, and the Long Game
Timing explains part of the recent edge. Larger endowments hold substantial venture capital and private equity that are not marked to market as frequently. When public markets surge, the smaller, more liquid portfolios can look especially nimble. Over longer stretches, however, the largest endowments have historically earned a premium of roughly one to one-and-a-half percentage points per year for accepting that illiquidity.
The model itself can override some of the limitations of smaller size. Keeping investment leadership in-house, maintaining disciplined governance, and preserving the ability to act on opportunities that larger players ignore all contribute. Fiscal-year end dates also matter. Catching a market crash or a powerful rally can swing three-, five-, and ten-year numbers noticeably.
In my experience the programs that treat the endowment as a permanent capital vehicle rather than a short-term scoreboard tend to weather these cycles more effectively. They accept that some years will favor the liquid, stock-heavy approach and other years will reward the patient holders of private assets.
Practical Lessons for Anyone Watching Endowment Results
Several takeaways stand out beyond the university context. First, size is not destiny. Flexibility and governance quality can more than compensate for fewer resources. Second, the choice between in-house and outsourced leadership is not binary. Hybrid models exist, yet pure control can preserve both culture and decision speed. Third, private and public markets both matter. Treating them as complementary rather than competing sleeves reduces the chance of being trapped on the wrong side of any single cycle.
- Long time horizons remain the single most powerful advantage any permanent capital pool enjoys.
- Manager selection is ultimately a people business. Pattern recognition and integrity matter more than glossy presentations.
- Donor restrictions force discipline. Constraints can improve rather than hinder decision quality.
- Liquidity needs differ by institution. Matching the portfolio to actual cash-flow requirements avoids forced sales at the worst moments.
- One strong or weak year can distort multi-year averages. Context always matters.
The numbers coming out this fall and winter will continue to shift the conversation. Some smaller schools will look brilliant for a few more years. Others will revert toward the mean once private equity valuations catch up or public market leadership changes. The programs that keep focusing on process rather than ranking tables are the ones most likely to stay competitive across full market cycles.
Watching Abilene Christian, Reed, and Colby reminds us that capital allocation excellence is not reserved for the largest balance sheets. Clear philosophy, aligned governance, and the willingness to act on opportunities others dismiss can produce results that surprise even seasoned observers. The next round of fiscal-year reports will tell us whether this pattern is temporary or the start of a more durable shift in how smaller endowments compete.
For now the evidence is clear enough. A university whose total endowment is a fraction of Yale’s has posted superior long-term returns by leaning into the advantages of its own scale. That lesson travels well beyond higher education. Anyone managing permanent capital can study the approach and ask whether their own structure is truly optimized for the horizon they claim to serve.
Looking Ahead: What the Next Cycle May Reward
Private markets will eventually distribute more capital again. When that happens the relative ranking of stock-heavy versus private-equity-heavy portfolios will likely reverse for a period. Schools that maintained balanced exposure rather than chasing the recent winners will be better positioned. Liquidity management will remain critical for smaller programs. The ability to meet spending needs without selling assets into weak markets separates durable strategies from temporary ones.
Fundraising capacity also plays a quiet but important role. Institutions that continue to attract new gifts can afford more aggressive private allocations because new capital replenishes the liquid portion of the portfolio. Those relying solely on investment returns face tighter constraints.
I keep coming back to governance. Boards that understand the difference between short-term noise and long-term policy give their investment teams room to operate. Boards that demand constant outperformance relative to peers often push portfolios into strategies that look good on a three-year chart and mediocre on a twenty-year one.
The real test for every endowment, large or small, is whether it can continue supporting the educational mission through multiple market regimes. Returns matter. Consistency of process matters more. Abilene Christian’s recent results demonstrate that a focused team with the right structure can deliver both. That combination is rarer than the raw asset figures suggest, and it deserves closer attention from anyone interested in how permanent capital actually works.
As more fiscal-year data arrives, the conversation will evolve. Some of today’s outperformers will fade. New names will emerge. The underlying principles that allowed a Texas university to outpace far larger endowments are unlikely to disappear. Flexibility, alignment, and genuine long-term thinking remain available to any institution willing to prioritize them over size and prestige. That, more than any single year’s number, is the lasting takeaway.
