Harvard University’s endowment grew 27.1% in fiscal year 2026, its strongest return in five years, the school said in its annual financial report released on Thursday. 

The endowment, which beat the S&P 500’s 22.3% total return in the same period by 4.8 percentage points, now totals nearly $68 billion. The outperformance came actions by the Trump administration to penalize the school and withhold funding from the university. 

“While markets can easily take back what they give, that return will strengthen the endowment’s capacity to support the University over time,” Harvard’s chief financial officer Ritu Kalra and treasurer Timothy Barakett wrote in the 49-page annual report. “The University deliberately smooths distributions so that operating support does not rise and fall with the markets. Strong investment returns therefore support Harvard’s work gradually, through future distributions.”

The returns marked the best year for the endowment, managed by the Harvard Management Company, since 2021. Harvard’s fiscal year ends on June 30. 

In its second-quarter 13F filing with the Securities and Exchange Commission, Harvard unveiled a $2.2 billion stake in Elon Musk’s SpaceX rocket and satellite company. It marked the endowment’s largest single holding by value, trailed by Taiwan Semiconductor Manufacturing Company at just under $350 million. 

Harvard’s financial picture, though, is undermined by moves by the federal government. Federally-sponsored research revenue declined 19.5% to $509 million in fiscal 2026. 

And starting in the current fiscal year, “endowment resources will face an additional constraint, with the federal excise tax on Harvard’s net investment income rising nearly six-fold, from 1.4% to 8%,” Kalra and Barakett wrote. “We estimate the higher rate will cost roughly $300 million a year.”

“[I]n a year of returns like this one,” the federal excise tax “would be several times larger,” they noted.

President Alan Garber acknowledged such headwinds, but said in the report that Harvard can still succeed.

“Together, we have the opportunity to set the University on a path to excellence that none of us can imagine today,” he said. “Notwithstanding the challenges and uncertainty, this is a thrilling time to be part of a great American institution devoted to Veritas.”