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MIO employs a team of advisors who provide timely and objective advice to current and former McKinsey partners on long-term asset allocation, wealth management, and retirement planning.
MIO manages nearly $20 billion of assets across public and private markets. More than 90% of MIO’s active assets under management are managed with full discretion by third-party managers (i.e., hedge funds and other alternative investment managers, including illiquid strategies like private equity). We place these funds either directly with the third-party managers in our role as limited partners, or we hire them to manage our capital in a separately managed account in vehicles that are operated by MIO – where the third-party managers have full trading authority. Our portfolio of third-party managers is highly diversified across strategies, asset classes and geographies, with well over 100 managers deploying dozens of distinct strategies. MIO grants full trading discretion and authority to these managers, and focuses on monitoring performance and risk limits.
MIO deploys the approximately 10% of active assets not managed by third parties through its own macro trading strategies. This allows MIO to efficiently acquire asset class exposures in the funds’ benchmarks, and to invest in alpha-generating macro opportunities that are uncorrelated with the market. Through these strategies, MIO directly trades in major asset classes such as sovereign debt, commodities, foreign exchange, equity indices and credit indices. MIO does not directly invest in the stocks or bonds of companies, public or private, anywhere in the world.
Our goal is to deliver value to investors over market-based benchmarks. Performance is measured against specific benchmarks that have been communicated to investors. Over time, we aim to optimize long-term returns and maximize the Sharpe ratio (i.e., risk-adjusted returns) of the portfolio, net of costs. We aspire to provide equity-like long-term total returns, but with significantly less risk. We have been successful in doing so historically—with substantially lower volatility and smaller peak-to-trough drawdowns.*
Our approach combines strategic asset allocation with the active management returns from our third-party manager investments and our in-house macro trading. The strategic asset allocation (reflected in the benchmark of the funds) is one which we believe maximizes expected risk-adjusted return for a passive asset allocation; the active management we provide through third-party manager selection and macro trading is designed to produce outperformance uncorrelated to financial markets. Historically, this has helped us deliver steady returns to our investors, through economic cycles, and with only moderate beta to the equity market.