Yale’s return did outpace that of the biggest university endowment, Harvard’s, which managed a return of 8.1 percent.

In a telephone interview, Mr. Swensen noted Yale’s modest holdings in domestic equity markets — about 4 percent of its holdings — which reduced its exposure to risk. “Last year that helped,” he noted, helping it to post a gain when many others were showing lackluster returns or a loss. But in the most recent year, the allocation curtailed Yale’s gains from a booming stock market.

Yale continues to diversify its holdings into hedge funds, where it has 25 percent of its assets, and venture capital, with a 17 percent stake, in addition to foreign equity, leveraged buyouts and real estate, as well as some bonds and cash. That diversification strategy, which Mr. Swensen pioneered, is widely followed by larger institutions.


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Indeed, the leaders of the M.I.T., Stanford and Princeton endowments — Seth Alexander, Robert F. Wallace and Andrew Golden, — all trained at Yale. The strategy of using outside managers to handle these diverse asset groups has been widely imitated.

One holdout had long been Harvard, where a large chunk of the endowment was managed internally. But under its new chief, N. P. Narvekar, more of the funds will be overseen by outside firms as Harvard shrinks its own staff.

The diversification approach at many of the largest endowments has generated some skepticism in an era when stock markets have been strong. But over a 20-year period ended June 7, Yale pointed out in its release Tuesday, the endowment produced an average annual return of 12.1 percent — outperforming domestic stocks, which returned 7.5 percent, and domestic bonds, which returned 5.2 percent.

Endowments are a crucial component of university budgets. During the financial crisis of 2008, when many endowments plummeted in value, some schools had to cut spending significantly. Distributions from the Yale endowment to the operating budget have increased at an annualized rate of 9.2 percent over the past two decades. It is the university’s largest source of revenue, and in the current fiscal year, it is expected to contribute $1.3 billion, roughly 34 percent of the university’s operating budget.

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