The endowment of Yale University turned in a much improved performance in its latest year, though still not as strong as the broad stock market.

After two years of unusual weakness, the endowment, run by David Swensen, posted a return of 21.9 percent for the fiscal year ended June 30. It edged out the 21.4 percent posted recently by the Harvard University endowment, which remains a bit bigger.

The double-digit gains came in a strong year for the United States stock market. For example, the Wilshire 5000 Total Market Index had a total return of 31.99 percent in the same period. Yale’s gain helps make up some lost ground. The endowment posted a return of 8.9 percent a year ago, even as many endowments generated returns of 9 percent to 14 percent. The previous year had been an even bigger setback. In 2009, Yale’s endowment, with considerable investments in real estate, commodities and timber, fell 24.6 percent.

For the moment, Yale has outperformed other universities over 10 years, with an average annual return of 10.1 percent. Harvard now has a 9.4 percent annualized return over 10 years. Some other stellar performers, including Princeton and Columbia, have yet to report.

Mr. Swensen is the pioneer of the concept of institutional diversification into assets like timber, hedge funds and private equity, and the Yale endowment is considered a barometer of the effectiveness of that approach.

The average annual return for endowments and foundations with more than $1 billion in assets was 19.38 percent, according to data compiled by the Wilshire Trust Universe Comparison Service. Over 10 years, the average was 5.99 percent.

After subtracting operating expenses, the value of Yale’s endowment is now $19.4 billion.

Led by Mr. Swensen for 26 years, the Yale endowment has maintained its diversified portfolio despite the strong headwinds in the financial markets in the last few years.

Its domestic stock holdings gained 24.5 percent last year, or 7.4 percentage points less than the broad Wilshire 5000 index. But the endowment had just 7 percent of its holdings in domestic stocks.

The endowment said it had a bigger gain from its foreign equity holdings, which represent 9 percent of its assets. Foreign equities generated a return of 40.7 percent, exceeding its benchmark index.

After a year of losses, the private equity portion of Yale’s portfolio generated a return of 30.3 percent. Private equity is the biggest asset class, representing 34 percent of Yale’s portfolio. Real estate, the next largest asset class, accounts for 20 percent of Yale’s holdings.

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