Professional Documents
Culture Documents
2017
Presented by:
Jeffrey Gundlach
CEO, DoubleLine
1
Lagging Behind
Percentage of U.S. Equity Funds outperformed by
benchmark
5-year 10-year 15-year
Source: S&P Dow Jones Indices as of December 31, 2016, Wall Street Journal
2
Self Portrait with Tuxedo
1927
Max Beckmann
3
Active vs. Passive Equity Flows Cumulative Since
2007 2007 through 2017
$2,000
$1,500
Passive Cum Flows: $1.7 Tn
$1,000
$500
$0
-$500
-$1,000
Passive US Equity Funds
Active US Equity Funds
-$1,500
Fund universe based on US stock market, long-only mutual funds and ETFs; 2017 annualized on partial years flows. * Through April 30, 2017
Source: Bloomberg, Morningstar, DoubleLine 4
U.S. Equity Funds Cumulative Net Flows
1993 through 2017
$2,500
US Equity Funds Cumulative Net Flows ($bn)
$1,000
$500
$0
-$500
Fund universe based on US stock market, long-only mutual funds and ETFs; 1993 and 2017 annualized on partial years flows. * Through April 20, 2017.
Source: Bloomberg, Morningstar, DoubleLine 5
The S&P 500 is maintained by a committee of market professionals.
Having the index committee means the S&P 500 is actively managed.
6
Bill Miller noted that the S&P 500s track
record of being very hard to beat
suggested that the index committee were
actually good active managers
7
I know its been 15 years
since we've been in the
playoff. Well get ready,
were going.
-Rex Ryan
8
Insanity in individuals is
sometimes rare; but in
groups it
is the rule
Friedrich Nietzsche
9
In Heaven, all the
interesting people are
missing
Friedrich Nietzsche
10
Woman was Gods second
mistake
Friedrich Nietzsche
11
There are no facts only
interpretations
Friedrich Nietzsche
12
Performance: Active vs. Passive Managers Has
Been Cyclical
14
U.S. Represents over 50% of Global Market Cap
15
... but only 24% of GLobal GDP
16
GDP Weighted Global Equity Index vs. ACWI (1995-2017)
Cumulative Returns of GDP Weighted Equity Basket vs. MSCI ACWI
200
150
100
50
GDP Weighted Equity Basket
0
MSCI ACWI
-50
5.00 GDP Weighted Outperformance
-
(5.00)
(10.00)
(15.00)
(20.00)
(25.00)
GDP weighted index uses top 10 countries by share of GDP. Rebalanced every 5 years.
MSCI ACWI = MSCI ACWI index is a free-float weighted equity index. It includes both emerging and developed world markets. You cannot invest directly in an index. 17
S&P Capitalization / U.S. GDP
CAPE ratios adjusted for inflation by using headline CPI deflated earnings. April 21, 2017 CAPE uses March 2017 CPI data
Source: Bloomberg, DoubleLine
S&P = S&P 500 is Standard & Poors Index is a capitalization weighted index of 500 companies. MSCI = MXEF Index is the MSCI Emerging Markets index is a free float equity index that captures large and mid-cap EM markets. You cannot invest directly in an index.
19
Price -to-Book Ratio - S&P 500 vs MSCI Emerging
Markets December 31, 2004 through May 6, 2017
Source: Bloomberg
S&P 500 is Standard & Poors 500 Index is a capitalization-weighted index of 500 U.S. stocks. MSCI EM Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM)
countries. You cannot invest directly in an index. 21
S&P 500 vs. MSCI EM Relative Performance (3 yrs)
May 6, 2014 through May 7, 2017
Source: Bloomberg
S&P 500 is Standard & Poors 500 Index is a capitalization-weighted index of 500 U.S. stocks. MSCI EM Index is a free-float weighted equity index that captures large and mid-cap representation across Emerging Markets (EM) countries. You cannot invest directly in
an index.
23
USD and Fed Hiking Cycles
150
140
1983
130
2015-Now
120
1999
Cumulative Performance
110
100 1994
90
80
2004
70
1986
60
55
90
-105
-100
-95
-90
-85
-80
-75
-70
-65
-60
-55
-50
-45
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
45
50
60
65
70
75
80
85
95
100
105
Weeks Around First Fed Hike
Source: Bloomberg, DoubleLine
24
Trump And The U.S. Dollar (December 31, 2007 to May 7, 2017)
"I love the concept of a strong dollar, in many respects obviously I like a strong dollar. But
when you look at the havoc that a strong dollar causes," he said on CNBC. "While there
are certain benefits, it sounds better to have a strong dollar than in actuality it is.
Donald Trump
27
The Voice of Conscience:
I am under pressure to
cut manager fees
28
The Voice of Practicality:
Index funds have been
outperforming lately
29
The Voice of Gundlach:
Toss them out of the
window
30
Investment Recommendation:
Long EEM (Emerging Markets ETF)
Short SPY (S&P 500 ETF)
Leverage 1x
This is the opinion of the speaker. Performance is no guarantee of future results. This is not a solicitation to buy or sell. 31