Harvard’s money managers announced that the endowment grew 8.6 percent in the year ending June 2008, outpacing both internal and industry benchmarks in a year of historic market turmoil.

The returns bring the largest endowment in higher education to $36.9 billion from $34.9 billion last year. The fact that the endowment only increased by 5.7 percent was due to the highest spending from the endowment in Harvard history.

The stellar returns were fueled in part by steep increases in commodity prices in areas such as oil, metals, and food. While Harvard invests only 8 percent of its endowment in this category, the value of these holdings jumped 35.8 percent in Harvard’s last fiscal year.

While the returns fell far short of last year’s exceptional 23 percent growth, the gains still compare favorably given that they come during a bear market that has seen the S&P 500 index, a standard baseline for stock-market performance, drop more than 13 percent over the same period.

The 8.6 percent gain puts Harvard comfortably in the top 5 percent of peer investment groups as measured by the Trust Universe Comparison Service and far outpaces the group’s median return of -4.4 percent over the year.

Financial markets have declined dramatically in the past 12 months as the effects of high rates of home loan defaults tore through the economy, wiping out billions in capital. Among the first casualties of the distress on Wall Street was Sowood Capital Management, a Boston-based hedge fund founded by ex-Harvard investment managers, that folded last July and took $350 million of Harvard’s money with it.

Despite this early blow, Harvard Management Company, which invests the University’s endowment, credited its practice of monitoring external investments with keeping total returns in the black.

The downturn accelerated in recent months as lenders spooked by steep losses and high-profile bank failures have tightened their purse strings.

While recent government intervention has calmed markets somewhat, Harvard’s money managers wrote in their annual letter to investors announcing this year’s returns that they are “keenly aware” that the slide may continue.

“In Fiscal Year 2009, we expect to see a continuation of the process of financial market de-leveraging,” the managers wrote, referring to the increased difficulty of borrowing. “This process will likely create periods of disruption and market volatility.”

Harvard’s solid investment returns come at a time of leadership transition for the management company, which has been led by four different chiefs in as many years.

Harvard’s investment company returned to permanent leadership July 1 with new chief executive Jane L. Mendillo, who worked at Harvard for 15 years before managing Wellesley College’s investments from 2002 to 2008. Before that, it spent much of the past year with interim leadership after its former chief, Mohamed A. El-Erian, announced last September that he would return to a high-ranking executive position at Pacific Investment Management Company, a bond-specialist based in Los Angeles.

During his 22-month tenure, El-Erian was tasked with bringing stability to an organization that had been rocked by the 2005 departure of its long-time CEO Jack R. Meyer, who left with a quarter of the management company’s staff amid heated criticism over multimillion dollar compensation packages for him and his top managers. Meyer and several of his former lieutenants now run the Boston-based hedge fund Convexity Capital Management.

Robert S. Kaplan, a former vice chairman at Goldman Sachs and a professor at Harvard Business School, served as interim CEO after El-Erian stepped down late last year.

—Staff writer Clifford M. Marks can be reached at cmarks@fas.harvard.edu.

—Staff writer Nathan C. Strauss can be reached at strauss@fas.harvard.edu.