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Matthias Knab, Opalesque for New Managers: Michigan, MIT, and Stanford endowments outperformed peers by 200-300 bps in FY2025. Analysis from Markov Processes International reveals concentrated AI and crypto bets, not manager selection, drove the exceptional 14-15% returns.
The Performance Puzzle
When fiscal year 2025 endowment returns were published, three institutions stood out from the pack with remarkable outperformance. While most elite university endowments clustered around 11-12% returns, the University of Michigan reported 15.5%, MIT achieved 14.8%, and Stanford delivered 14.3%. These results exceeded both the Ivy League cluster and a simple 70/30 global portfolio benchmark by 200-300 basis points.
This outperformance raises a critical question for institutional investors: In a year when traditional portfolios already delivered strong double-digit returns, how did these endowments generate an extra 300 basis points? The answer appears to lie not in superior manager selection, as their CIO letters suggest, but in concentrated thematic exposures that have grown large enough to move total fund performance.
Market Conditions Don't Explain the Gap
The fiscal year 2025 market environment delivered mixed results across asset classes:
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