Endowments and foundations with a larger allocation to private investments have significantly outperformed their peers, according to research from Cambridge Associates.

Top-decile institutional investors had a median allocation of 40 percent or more in private investments, a Private Investing for Private Investors report from the investor advisory firm found.

Those with a 20-year average allocation of at least 15 percent generated an 8.1 percent median annualized return, 160 basis points higher than institutions with a less than five percent allocation.

Institutions with more private investment funds in their portfolio also faced a reduced risk of losing capital. A one fund portfolio had a 23.6 percent chance of generating a total-value-to paid-in multiple of less than one, compared with a 9 percent chance for those with three funds and a 0.7 percent chance for nine fund portfolios.

Family offices have also been rewarded for greater exposure to private markets. Non-US families, which on average have a 26 percent allocation to private equity, generated a 4.6 percent return last year, according to Family Office Exchange. US families, which have a 15 percent allocation, recorded a -1.3 percent loss.

Endowments and foundations are growing more concerned over private investment costs. In consultancy firm NEPC’s Year-End 2018 Survey, 40 percent said fees were a greater concern than ever before due to more muted return expectations.

Harvard Management Company, which manages the US university’s $39 billion endowment, said in September that it was “not pleased” with its overall 10 percent return for the 12 months to 30 June. Private equity was its best performing asset class at 21 percent, while “other real assets and private debt” had a 1 percent loss.