Strong market performance by Stanford's investments helped buoy the value of its endowment by 9.7 percent over the past year to $18.7 billion, the university has announced.

The 2013 results show that the university has fully recovered from the deep hole that the financial crisis tore in its investments, with the fund surpassing the previous peak value of $17.2 billion in 2007. Stanford's endowment, which helps fund the school's financial aid and day-to-day operations, is critical to its mission.

"Thanks to the generosity of Stanford's donors and excellent investment returns, the endowment had significant growth last year and now exceeds where we were before the 2008-09 financial downturn," said Randy Livingston, the university's chief financial officer. The value was calculated as of Aug. 31, the last day of Stanford's fiscal year.

Stanford's fast-growing endowment is still dwarfed by the size of Harvard's, which started fundraising more than 350 years ago. Harvard's endowment surged to $32.7 billion during the last fiscal year, with an annual rate of return of 11.3 percent on its investments.

Although most universities have yet to release updated endowment figures, Bowdoin, the University of Pennsylvania, and the Massachusetts Institute of Technology saw returns of 16 percent, 14.4 percent and 11.1 percent respectively.

The endowment is a collection of thousands of funds, many of which are restricted by their benefactors to specific purposes. Its total value depends not only on investment returns, but also on gifts and the sum of its annual distributions to the University's operating budget.

Stanford's endowment is just a part of its overall financial portfolio, called the merged pool, which climbed by 12.1 percent over the past year. Over past decade, this fund -- which includes the endowment and money set aside for hospital projects -- has achieved an annualized return of 10 percent. That compares to an average of 7.3 percent for the U.S. equity market and 4.5 percent for the U.S. bond market.

John Powers, CEO of Stanford Management Company, credited the strong performance to the U.S. and other developed world equity markets. Emerging market equities and fixed income returns were meager, he said.

Despite this strength, the university said it is taking a cautious approach in planning for next year, due to uncertainties about the federal government's research funding.

Contact Lisa M. Krieger at 650-492-4098.