Private independent day and boarding schools saw strong returns in fiscal 2025 while also increasingly delegating investment functions to outsourced CIO providers, according to a report from Commonfund.
Commonfund’s annual “Study of Independent Schools” prepared in collaboration with the National Business Officers Association, tracked the investment performance of 243 independent K-12 schools that collectively managed $17.3 billion in assets.
The report—which broke the institutions into three cohorts based on endowment size—found that for the first time in years, larger institutions, which on average had higher allocations to alternative investments, saw stronger returns than smaller funds, which had higher allocations to public market equities.
Schools with at least $50 million in assets and those with between $10 and $50 million reported an average 11.6% return, while institutions with less than $10 million reported an average 10.9% return in fiscal 2025 fiscal.
“Rebounding private strategies are again paying off for larger institutions,” the report stated.
Among all surveyed institutions, there was an average 35% allocation to U.S. equities, 30% to alternative investments, 17% to non-U.S. equities, 14% to fixed income and 4% to short-term securities, cash and other assets.
The smallest cohort—those with less than $10 million in assets—had an average of 48% of their assets allocated to U.S. equities. This cohort also had an average 2% allocation to alternative strategies. The largest cohorts had 34% of their assets in private markets and 32% in public markets. The smallest cohort averaged a 33% allocation to fixed income, compared with the largest cohort’s 13% allocation.
Among surveyed institutions, 52% reported using an outsourced CIO provider, an increase from 46% in the 2024 study and 33% in 2023.
“This growing adoption of the OCIO model reflects a strategic response to a changing asset allocation landscape and continued shifts in market performance,” the report’s authors wrote.
OCIO use was most prevalent among institutions with between $10 million and $50 million in assets, with 62% of these schools reporting a use of an OCIO. This figure was 49% for institutions with more than $50 million in assets and 34% for those with less than $10 million.
Approximately 44% of respondents said they used an OCIO for day-to-day investment management. Other uses for OCIO included capital markets research and idea generation (cited by 43% of respondents), portfolio rebalancing (39%), manager selection and due diligence (34%), and investment policy statement development (7%).
“In the midst of everything going on, independent schools continue to reap the rewards of careful endowment management,” said Commonfund Institute Executive Director George Suttles and NBOA President and CEO Jeffrey Shields in a joint statement. “We are also not surprised to see an increasing reliance on external investment partners to help navigate turbulent times and secure the positive results reported throughout the study.”
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Tags: Commonfund, OCIO