In the financial industry’s battle of humans versus machines, billionaire bond fund manager Jeffrey Gundlach is betting people will prevail.
“I don’t believe in machines taking over finance at all,” Gundlach, CEO of DoubleLine Capital, said Thursday night in a cocktail-hour interview before his induction into the Fixed Income Analysts Society’s Hall of Fame.
Gundlach, 57, is a top-ranked money manager whose $54 billion DoubleLine Total Return Bond Fund has outperformed 90% of its Bloomberg peers over the past five years. He co-founded the Los Angeles-based firm, which managed more than $100 billion as of March 31, after being ousted by TCW Group in 2009.
Gundlach singled out robo advisers, which provide online portfolio management using little human intervention, as a dangerous bet.
“It’s a one-size-fits-all financial solution,” he said. “Everybody gets the same portfolio, which means everybody owns the same stock, which means when they all decide to get out you cause a crash.”
What’s Gundlach’s advice for beating machines?
“Work hard,” he said.
Jim Grant, founder of Grant’s Interest Rate Observer, compared Gundlach to the beer commercial character dubbed the “most interesting man in the world,” based in part on his stints as an Ivy League scholar and spiky-haired, bleached-blond rock drummer before becoming a star money manager.
“Jeffrey would not be the most interesting man if all he did was buy low and sell high,” Grant said in prepared introductory remarks.
Gundlach received the award for his multidecade performance as a portfolio manager and business builder, according to Mark Howard, head of U.S. credit strategy at BNP Paribas and a FIASI board member.
“His teams at TCW and at DoubleLine have been remarkably loyal as well,” Howard said in an email before the ceremony.
Gundlach is also known for his record of bold predictions — such as his comments, long before the election, that Donald Trump would become president.
“Peak anti-Trump has passed,” Gundlach said Thursday. “He’s doing fine. I think the grieving process for the Hillary people is finally starting to progress.”
Gundlach was inducted into the FIASI Hall of Fame alongside Dana Emery, the CEO of fixed income at Dodge & Cox. Past inductees, such as Joyce Chang, Ed Altman and Andy Kalotay, were on hand. The society presents events to educate members.
“For the massive fixed income field I think we play an important role driving discussion and addressing issues like liquidity in the markets, regulatory developments, new product areas,” Howard said before the event. “We’ve had big pushes on the whole topic of passive versus active, and we can do it in a way that is not slanted.”
The group includes members from European and U.S. banks, rating companies and data vendors. The variety of the membership is a learning opportunity in itself: “At times, Wall Streeters can get silo’d,” Howard said.
Both honorees discussed their charitable activities. Emery, 55, in an interview talked about her involvement with Summer Search, which organizes enrichment programs like Outward Bound trips for students who wouldn’t otherwise be able to afford them.
Gundlach is supporting a renovation and expansion of the Albright-Knox Art Gallery in Buffalo. A native of the Buffalo area, Gundlach pledged in June 2016 to give $42.5 million — the largest cash donation to a cultural organization in western New York history — if the museum raised $50 million by Labor Day. The institution raised $60 million by the deadline and renamed itself the Buffalo Albright-Knox-Gundlach Art Museum. Construction is set to begin in 2019 for completion in 2021.
Gundlach’s investing comments also touched on skepticism of Amazon.com, which last week agreed to a $13.7 billion acquisition of organic grocer Whole Foods Market. “Amazon will never be able to execute on its business plan,” he said. “You can’t have one retailer.”
On cryptocurrency bitcoin, Gundlach sees a coin flip: “It’s either going to zero or a million.”