What happened and why it matters
MIT's endowment returned 10.3% in the most recent year, pushing its value to $29.2 billion. The Cambridge, Massachusetts school didn't share what powered the performance. Even with the new high, the return trailed the median for big funds in the year ended June 30, a period when many universities posted strong results.
The new tax tab
Wealthy private universities now face an 8% federal tax on net endowment income, up from 1.4%. MIT said the increase could lead to liabilities exceeding $1 billion linked to gains already on the books, with more costs in years when the endowment throws off returns that support campus operations. In a report published Friday, MIT wrote: "Just as federal grant funding is being curtailed, this penalizes the Institute for prioritizing financial self-sufficiency."
How peers fared
Over the past decade, MIT's endowment has returned an annualized 11.7%. Harvard and Yale have said the higher tax could cost each of them several hundred million dollars a year, and neither has reported its latest investment results yet. Stanford, also subject to the tax, notched a 31.7% return, lifting its 10-year annualized result to 12.5%.
"Reflects our persistent efforts to rebuild the portfolio with greater concentration and quality," said Rob Wallace, Stanford's chief investment officer. Stanford didn't disclose what drove the gains.
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The big outliers
Thanks to early stakes in SpaceX, a handful of institutions have lately logged returns above 30%. The University of North Carolina reported a 37.8% return, while Washington University in St. Louis came in at 37.3%.
What this means for your money
University endowments are all investing for the long haul, but their year-to-year swings can be stark, and policy changes can reshape the math. If you follow endowment-style strategies in your own portfolio, the spread between MIT's single-digit gain and peers' outsized jumps is a reminder that what you own and when you own it still drives most of the outcome, taxes or not.
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