Separating Signals from Noise - Perspectives on the Future of Investing

Goldman Sachs Exchanges

Goldman Sachs

Business

4.4 • 1K Ratings

🗓️ 29 September 2015

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

Tim O'Neill, global co-head of the Investment Management Division at Goldman Sachs, on the seduction of big data, why a market needs both active and passive investors, and the greatest challenge for investors of every generation. This episode was recorded on September 15, 2015. The views and opinions expressed herein should not be construed as an offer to buy or sell any securities and such views/opinions may differ from those of Goldman Sachs Global Investment Research or other departments or divisions of Goldman Sachs and its affiliates. This information may not be current and Goldman Sachs has no obligation to provide any updates or changes. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by any Goldman Sachs entity or individual to that listener, nor to constitute such person a client of any Goldman Sachs entity. Copyright 2015 Goldman Sachs. All rights reserved.

Transcript

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0:14.8	This is exchanges at Goldman Sachs where people from our firm share their insights on developments currently shaping markets, industries, and the global economy. I'm Jake Seward, Global Head of Corporate Communications here at the firm.
0:20.4	The prospect of the Fed hiking interest rates and slower growth out of China has unsettled global markets.
0:26.0	We're joined today by Tim O'Neill, Global Head of Goldman Sachs Investment Management Division,
0:31.0	to discuss investing in today's climate and how the field
0:35.1	could evolve in the future. Tim, welcome to the program. Thank you Jake for having
0:39.2	me. So during this recent period of market volatility,
0:42.7	there's been a renewed debate, maybe a debate that never stopped
0:45.8	about the benefits of active versus passive investing.
0:49.4	You spoke earlier this year with Bloomberg
0:51.2	and called passive investing a potential bubble machine.
0:55.0	Talk a little bit about the differences between active and passive investing and how you see
0:59.9	these two paths developing in the future?
1:03.0	Well, the promise of active investing, Jake,
1:05.2	is that they're going to deliver performance,
1:07.4	net of fees better than the benchmark,
1:09.2	whatever the benchmark might be for the US, global, or Europe.
1:13.0	It's been a difficult seven years for active investors
1:15.4	because the markets have risen so consistently
1:18.6	and persistently higher.
1:20.2	So most active managers have net of fees under performed the benchmark.
1:25.0	So it led back to this debate about whether or not the fees that you pay for active managers are worth it.
1:30.0	And there's been simultaneously a great shift towards passive investing because it's cheap and you would get all of the market returns net of five or ten basis points.
	...

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