The drawn-out downturn in private market returns is hitting one group of investors especially hard: Ivy League university endowments.

Leading US university endowments, many of which allocate outsized portions of their portfolios to private equity and venture capital, have underperformed the university average for the second year in a row, with prominent ones like Yale and Princeton lagging far behind their smaller peers, as the once lucrative asset class suffers from a plunge in dealmaking and stock listings. 

Top endowments have long used aggressive exposure to private investments in pursuit of excess returns they believe are out of reach through public markets. Now, as those investments have yet to pay off, some large endowments like Princeton have issued bonds to meet funding needs, according to the New Jersey Educational Facilities Authority.