In 1921, John Maynard Keynes took control of an endowment that most economists at the time would have called recklessly equity heavy. Managing King's College, Cambridge's investment fund for the next 25 years, he pushed it further into shares than almost any institution of the era, planting the seed for what the investment world now calls the endowment model (Chambers and Dimson, 2015). Decades later, an American economist named David Swensen took that idea, scaled it dramatically at Yale, and turned it into the most influential institutional investing strategy of the past forty years. The irony is that while a Cambridge college gave the model its first real test, it is American universities, not British ones, that pushed it furthest into private equity and venture capital. The gap between the two traditions has never been starker, or more consequential, than it is right now.
The American allocation
Start with the numbers. Harvard, the world's largest university endowment at $53.2 billion, holds 39% of that fund in private equity alone, its single biggest asset class, plus another 32% in hedge funds (Chief Investment Officer, 2024). Stanford targets 38% private equity (Stanford Daily, 2024). Yale, the spiritual home of the model, holds more than $20 billion in buyout and venture funds combined, roughly half its entire endowment (Yale News, 2025). Princeton's illiquid holdings, independent return strategies, private equity and real assets together, made up over three quarters of its portfolio by 2023 (Institutional Investor, 2024).
The British reality
Now look at Britain. Oxford's £6 billion endowment fund sits at around a quarter in private equity (University of Oxford, 2025). Cambridge's pooled fund holds a similar proportion, and is working toward a 30% target over time (University of Cambridge, 2024). King's College London, by comparison, holds just £17.8 million in named private equity funds, through managers like HarbourVest, LGT Crown and Accolade Partners, around 5.5% of its £340.8 million endowment (King's College London, 2025). Set against Harvard's private equity book of more than $20 billion, the difference in absolute scale runs into the thousands.
Private equity allocation by institution (approximate %)
Gold bars: US institutions. Muted bars: UK institutions. Sources: Yale News (2025); Chief Investment Officer (2024); Stanford Daily (2024); University of Oxford (2025); University of Cambridge (2024); King's College London (2025). Yale figure represents illiquid alternatives. Bars scaled proportionally to Yale's ~50% peak.
Why such a divide?
Part of it is sheer size. American giants can build internal teams sophisticated enough to access the very best fund managers, something a £340 million endowment simply cannot replicate. Part of it is structural. UK charity law and accounting conventions push university funds toward income generation and lower volatility, while American institutions' exemption from tax gives them far more allocation freedom (King's College London, n.d.). And part of it is cultural. Decades of Silicon Valley proximity have made Stanford a natural early backer of venture firms in a way no UK university can match.
5.8%
PE return, FY2024
24.6%
S&P 500 return, FY2024
$2.5bn
Yale PE stakes listed for sale
When the model gets tested
But 2025 has complicated the story. After private equity returned just 5.8% and venture capital a mere 1.7% in fiscal 2024, against a 24.6% return for the S&P 500 (TIFF, 2025), the largest American endowments found themselves in an unfamiliar position: selling. Yale moved to offload up to $2.5 billion of private equity stakes in a deal insiders nicknamed Project Gatsby (Institutional Investor, 2025). Harvard followed with sales of its own, part of a wider wave that pushed Ivy League schools to issue nearly $3 billion in municipal debt to meet capital calls, up 650% year on year (Sherwood News, 2025). For the first time in a generation, the architects of the endowment model are quietly admitting they may have gone too far into illiquidity.
For a university like King's, the lesson might not be to chase Harvard's allocation. It might be to watch closely what happens when the model that started here gets tested by the institutions that took it furthest.
For a university like King's, the lesson might not be to chase Harvard's allocation. It might be to watch closely what happens when the model that started here gets tested by the institutions that took it furthest.
References
- Chambers, D. and Dimson, E. (2015) The British Origins of the U.S. Endowment Model. Financial Analysts Journal, 71(2).
- Chief Investment Officer (2024) Harvard Assets Reach $53B With 9.6% Return, Endowment Remains World's Largest.
- Institutional Investor (2024) What Drove Harvard's Returns?
- Institutional Investor (2025) Yale's Potential PE Sale Won't Solve Liquidity Challenges.
- King's College London (2025) Financial Statements for the Year to 31 July 2025.
- King's College London (n.d.) King's College London Endowment Assets Ethical Investment Policy.
- Sherwood News (2025) The Fund Managers for Ivy League Endowments Somehow Managed to Flop in This Market.
- Stanford Daily (2024) How Does Stanford's $36.5 Billion Endowment Work?
- TIFF (2025) Five FY24 Endowment Performance Trends per NACUBO-Commonfund Study of Endowments.
- University of Cambridge (2024) Reports and Financial Statements for the Year Ended 31 July 2024. Cambridge University Reporter, 6773.
- University of Oxford (2025) Our Endowment.
- Yale News (2025) Yale Reports Investment Return for Fiscal 2025.