Investment Highlights from 
Charles A. Kennedy, Chief Investment Officer

Overview

Carnegie Mellon University’s mission seeks to shape the future for the greater good by providing transformational research and education focused on advancing knowledge and understanding in science, technology, the humanities, business and the fine arts. Carnegie Mellon’s endowment is a key strategic asset in achieving this mission. Created largely through incredible acts of philanthropy and augmented by careful financial stewardship, the endowment stood at a market value of $3.5 billion as of June 30, 2025.

By providing a permanent and consistent source of funding for scholarships, professors’ salaries, laboratory equipment and other important needs, the endowment enables our faculty and students to fulfill the university’s mission. Critically, endowment support for tuition assistance allows Carnegie Mellon to attract and retain a highly qualified, multifaceted and talented student body.

During Fiscal Year 2025 (FY25), the university announced its latest financial aid expansion, the CMU Pathway Program: Undergraduates whose families earn less than $75,000 annually will be able to attend Carnegie Mellon tuition-free, while undergraduates whose families earn less than $100,000 annually will be able to attend Carnegie Mellon without borrowing any federal student loans. The CMU Pathway Program joins recent access and affordability initiatives including the Tartan Scholars program (for undergraduate students) and the CMU Rales Fellows program (for graduate-level STEM students) designed to ensure that deserving, talented and high-achieving students receive the support they need to afford, attend and succeed at Carnegie Mellon.

With its perpetual life, the endowment is uniquely situated to provide funding today, tomorrow and for future generations to help our students and faculty achieve their goals and aspirations and to advance the university’s mission.

Strategy and Allocation 

The endowment’s portfolio of investments is managed with a long-term, growth-oriented view and is evaluated by its effectiveness in achieving — over time — two fundamental objectives: (1) generating steady and substantial financial support for students, faculty and programs; and (2) balancing current demands for support with the goal (at a minimum) of maintaining the endowment’s real purchasing power for future generations (i.e., preserving intergenerational equity). To maximize long-term expected returns within acceptable levels of risk and liquidity, Carnegie Mellon designed its policy asset allocation using a combination of academic theory, quantitative analysis and informed market judgment.

To achieve these objectives, Carnegie Mellon targets broad portfolio exposure of 85% in equity investments for long-term growth and appreciation and 15% in fixed income investments to provide stability and liquidity. Since FY04, the university’s equities focus has been on private investments, utilizing private equity funds globally. We believe that over the long term, private equity investment returns, including those from emerging markets funds, will exceed the returns generated from investing in public securities. We recognize that this strategy will generate unsteady returns in the short term due to variable influences such as macroeconomic forces, the level of initial public offering activity and the volume of mergers and acquisitions. However, our goal is focused not on short-term swings but on top quartile long-term performance.

Figure 1: Asset Allocation – Actual Allocations and Policy Targets

As depicted in Figure 1, the endowment is at its 85% equities target and well within other policy constraints. The nature of private equity investing and the growth of Carnegie Mellon’s endowment necessitate a continued focus on expanding our best private equity relationships and identifying the next generation of top-tier managers. Fortunately, Carnegie Mellon’s endowment is of a size that permits new, reasonably sized commitments to value-creating investment managers that will be meaningful to the endowment’s asset allocation and investment return.

Investment Performance

The university’s net investment return for FY25 was 10.9%. More significantly, given the long-term goals of the investment strategy and the “noise” (versus signal) often associated with short-term equity results, Carnegie Mellon’s three-, five-, and 10-year returns were 6.8%, 10.9%, and 9.1%, respectively.

Carnegie Mellon’s asset allocation emphasizes diversification across geographic markets (including emerging markets), industries, investment managers and asset classes (including private equity)  and includes fixed income to ensure ready liquidity. Net investment returns will continue to reflect this prudent investment discipline. U.S. public equities, due to the strong outperformance of a very small group of large tech companies (often referred to as the Magnificent 7), may persist in delivering strong relative performance, but we believe a broader, global portfolio ultimately will outperform over the longer run reflecting the spreading of innovation, long-term demographic changes and other drivers of value creation at work. We also believe the underpinnings of private investments will continue long-term outperformance. These underpinnings include a larger investable universe (many high-growth companies are remaining private for longer and many small businesses never go public), better alignment of interests between company decision-makers and owners (reduction in agency costs)  and the ability to better capture the value of human innovation seen in startup companies.

Endowment Attribution

The endowment’s market value increased to $3,484.6 million as of June 30, 2025, from $3,232.0 million as of June 30, 2024. This net increase of approximately $252.6 million reflects the collective impact of $75.5 million from gifts and other sources, plus $340.2 million from net investment gains, less $163.1 million of distributions to support the university’s operations.

As depicted in Figure 2, for the 10-year period ended June 30, 2025, the endowment’s market value increased approximately $2,146.4 million (from a beginning market value of $1,338.2 million), reflecting the collective impact of $1,166.4 million from gifts and other sources, plus $2,021.8 million from net investment gains, less $1,041.8 million of distributions to support the university’s operations.

Figure 2: Endowment Bridge
(dollars in millions)

As previously noted, cash distributions from the endowment (i.e., the draw) provide a key source of support for various university activities and programs in need of consistent funding ranging from general operations to scholarships and professorships. During the last decade, the draw from the endowment has grown from 5.4% of the university’s operations to 9.6% for FY25. Overall, the draw grew both in absolute terms and relative to the operating budget of the university (which grew 4.6% annually over the decade), while following a consistent draw policy in place since 2004. Even with the higher level of support, the university’s endowment contributes less than half of the relative operating support received by many academic peers from their endowments. This variance leaves Carnegie Mellon more dependent on tuition and sponsored research than its peers. Consequently, Carnegie Mellon remains focused on growing the endowment to assure the financial resources and flexibility exist to successfully pursue its long-term research and education mission.

The historical activities of the endowment, including the draw and its support expressed as a percentage of annual operations, are summarized in Figure 3.

Figure 3: Endowment Values and Attribution

The Dietrich Foundation

The Dietrich Foundation, established by Pittsburgh industrialist and long-time university trustee William S. Dietrich II, was created to manage in perpetuity his gift of approximately $500 million in assets intended to benefit the university and other higher education and charitable institutions. The Dietrich Foundation’s assets are not reflected in the university’s financial statements. The university’s share of the annual distributions from The Dietrich Foundation is 53.5%. If this percentage is applied to the estimated value of The Dietrich Foundation’s assets of $1,500.0 million as of June 30, 2025 and the result were to be added to Carnegie Mellon’s endowment of $3,484.6 million, then the combination would total $4,287.1 million. Annual distributions from The Dietrich Foundation over time equal 3.0% of the value of the foundation’s net assets as measured on January 1 of each year. The Dietrich Foundation’s gift added to Carnegie Mellon’s endowment for FY25 was $23.7 million, and cumulative gifts since the initial gift in Fiscal Year 2013 total $209.8 million.

Summary

Carnegie Mellon’s endowment provides an important and permanent source of financial and operational stability, which helps university leadership perpetuate academic and research excellence in a rapidly changing and increasingly competitive world. The enduring generosity of alumni and friends, combined with an investment program focused on compounding net returns for the long term, should continue to increase the value of the endowment over time. Thus, Carnegie Mellon’s endowment will continue to provide ongoing support for the university’s operating needs, while preserving purchasing power to support future generations of students and faculty.

Sincerely,

Charles A. Kennedy
Chief Investment Officer
November 20, 2025