mit presentation

MIT PresentationManagement Development Institute

New Delhi, India

February 4, 2016

MITs Financial Assets

Endowment Retirement Plan Retiree Welfare Benefit Trust Life Income Funds Working Capital

MITIMCo Major Responsibilities

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Investment Model Seven Core Ideas

1. We look for competitive advantages

Private Equity 30Real Estate 10U.S. Equity 9Marketable Alternatives 9Emerging Equity 7Real Assets 7International Equity 6Fixed Income 1

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Active ManagerRelationships

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2. We have a well-defined circle of competence

We focus on absolute return, bottom-up, value-oriented strategies

No trading and momentum strategies

No relative return strategies

No macro strategies

No quantitatively-driven strategies

We focus on A+ managers

No B managers with A opportunity sets


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3. We are willing to be first (and wrong)

Of our manager hires last year:

In over 80% of hires, we were the first institutional investor or part of a small group of institutional investors helping to put a firm in business

In over 50%, the manager had $200 million or less in AUM


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4. We have an unusual investment staff structure

Flat structure no titles and no hierarchy

Generalists no asset class specialization


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5. We prefer assets that are hard to underwrite

1. Brand new company with no cash flows

2. Retail center that is half-empty

3. Ship builder in Greece

4. New business models, like Amazon in the early

2000s


6. We ignore benchmarks when making allocation decisions

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Conviction


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7. We maintain a top-down risk framework

We monitor:

- Asset Allocation- Currency Exposure - Drawdown Potential- Geographic Exposure- Leverage Levels- Liquidity Availability- Manager Concentration

Portfolio Composition

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MIT Outperforms Average Endowment(Returns ending June 30, 2015)

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1 Year 3 Years 5 Years 10 Years 20 YearsMIT Endowment 13.2% 14.4% 13.8% 10.4% 12.9%Cambridge C&U Median 2.1% 10.0% 9.7% 6.7% 8.3%Difference 11.1% 4.4% 4.1% 3.7% 4.5%*Cambridge Associates College and University Median

Common Mistakes

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1. Compromise their definition of success by trying to be all things to all people.

2. Do things because they are conventional rather than because they are optimal.

3. Disregard small issues early on that compound into material problems in the future.

4. Fall into the trap of subtly ascribing meaning to short-termperformance.

5. Under-allocate time to the learning process.

Seth Alexander

[email protected]

Joel Cohen

[email protected]

Navneeth Harikumar

[email protected]

Questions?

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