Outsized positions have made many higher-education endowments less diversified and more at risk when shares slide
The University of North Carolina system endowment surged nearly 40% last fiscal year, largely thanks to its sizeable stake in SpaceX.
Colleges and universities are billions of dollars richer because of Elon Musk.
That's ironic, given that Musk has been critical of higher education. The so-called "Department of Government Efficiency" that he led oversaw huge cuts in research funding to colleges and universities. But because of outsized positions that a number of those institutions' endowments held in SpaceX (SPCX), Musk's rocket company that went public in June, they collectively are billions of dollars richer.
This helps to explain the uncharacteristically good investment performance of the average college and university endowment for the fiscal year ending June 30. SpaceX shares represent roughly 10% of the University of North Carolina system endowment, for example, and it gained 37.8% for the fiscal year. Harvard University's endowment had a $2.2 billion stake in the company, which according to the Harvard Crimson "was worth more than all of the endowment's other reported public holdings combined." For the fiscal year ending Jun. 30, Harvard's endowment-investment return was 27.1%.
In no small part because of these outsized SpaceX investments, the average college and university endowment beat the market during fiscal 2026 (the 12 months ending June 30). On average their return was 23.9% (among those that, as of this column's writing, had reported their fiscal-year performance).
If you weren't aware of SpaceX's role, you might wonder if colleges and universities had become better at devising market-beating strategies. But when just one stock accounts for so much of their endowment gains, it's more likely that luck played the dominant role. You should furthermore know that, because of the outsized SpaceX positions of many college and university endowments, they have become less diversified and riskier than is prudent. The stock has already declined nearly 15% since the beginning of the current fiscal year, which means that endowments with outsized positions are now suffering.
The above chart provides more evidence that these institutions are unlikely to beat the market over the longer term. You will notice that, even with beating the market in their latest fiscal year, the average college and university endowment is behind its benchmark for longer-term returns.
This reinforces the fundamental truth that the market is incredibly difficult to beat consistently, and therefore that our default investment strategy should be to buy and hold index funds. If the best and the brightest, with their highly paid professional staff, are unable to beat the market over the long term, what makes you think you can do any better?
Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com
-Mark Hulbert
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