The endowment of Yale University returned 26.3% in fiscal year 2026, the one-year period ending June 30, the university announced Tuesday, following a streak of strong investment returns for higher education institutions.
Assets managed by the Yale Investment Office rose from $11.3 billion to $45.5 billion at the end of June, the university said. The endowment surpassed the 8.25% target return it needs to meet in order to support the university budget.
Despite strong investment returns, the university will still face financial stress from a new federal excise tax on a select number of the university’s endowment investment returns. Yale’s tax rate will increase from 1.4% to 8%, costing the university $350 million annually, according to the university.
“These [tax] dollars would have otherwise supported students, faculty, staff, and local partnerships,” a statement from Yale said. “Other federal actions, including both implemented and proposed changes to federally funded research, will further affect university resources.”
Several higher education institutions—especially those like Yale that allocate heavily to private markets—benefited from the growth trend in artificial intelligence through their allocations to growth equity and venture capital investment managers and from the initial public offering of SpaceX.
Endowment returns this year so far, show a short-term vote of confidence in the so-called Yale Model—popularized by the late CIO Dave Swensen. The model espouses high, long-term allocations to alternative investments, which proponents say have the ability to outperform the public markets over long horizons.
For Yale and many peer institutions, investment returns faltered after the Covid-19 pandemic, with several institutions posting single digit and/or negative returns throughout the early 2020s.
Yale’s endowment previously returned 11.1% in fiscal year 2025, 5.7% in FY24, 1.8% in FY 23 and 0.8% in FY 22.
On top of new financial constraints including the tax increase on realized investment gains and other headwinds for university endowments, Yale in the last fiscal year implemented new measures to reduce university spending in anticipation of the excise tax increase.
These measures include hiring freezes, reductions in non-salary expenses, and retirement incentives, a statement from the university said.
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Harvard Endowment Returns 27.1% in FY 2026 |
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Yale Endowment Returns 11.1% in Fiscal 2025, Tempered by Buyouts, Real Estate |
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Endowment Tax Increase Will Have ‘Significant Impact’ on Yale Finances |
Tags: Yale University