Gundlach: Machines Won't Take Over Finance From Humans

Jun 23 2017 | 7:12pm ET

Machines won’t be replacing humans in the finance industry anytime soon, according to DoubleLine Capital CEO Jeff Gundlach, in an interview with Bloomberg.

Gundlach’s remarks were reportedly made prior to his induction into the Fixed Income Analysts Society’s hall of fame Thursday evening. The billionaire investor has made a number of very prescient calls in recent years, concluding very early that Donald Trump would become president, a December 2016 prediction that the 10-year U.S. Treasury yield would flirt with 2% again before it hit 3% and, more recently, that investors should think about swapping U.S. equities for those in emerging markets and Europe.

Gundlach’s flagship $54 billion Total Return Bond Fund has beaten 90% of its peers over the past five years, according to the Bloomberg article, and booked nearly three years of consecutive monthly net inflows before the streak ended in November 2016. 

In the interview, Gundlach is said to have made specific mention of so-called roboadvisors, which utilize passive investment vehicles such as index funds and ETFs to automatically allocate capital based on online algorithms for very low cost, low minimums and with practically no human involvement. They are at the core of the active versus passive debate and have become particularly popular with younger, tech-savvy investors and lower-net-worth individuals.

In his remarks to Bloomberg, Gundlach described roboadvisors as “a one-size-fits-all financial solution” in which “everybody gets the same portfolio, which means everybody owns the same stock.” The risk, Gundlach continued, is that such as scenario means a crash if all the algos decide to exit the market at the same time. 

Gundlach was honored by the Fixed Income Analyst Society for his multiple decades of performance as a portfolio manager and as the builder of a business with more than $100 billion in AUM, the article said.

The Fixed Income Analysts Society was founded in 1975 and draws from all disciplines – buy side, sell side, intermediaries, quants and academics – and all sectors – credit, rates, economics, securitized products, foreign exchange, emerging markets, municipal finance and commodities. Members include a wide array of European and U.S. banks, rating companies and data vendors. 

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