Mihir Worah of PIMCO speaking at the Investment Management Conference. Photo credit Max Adler '14.
On Thursday, November 15th, the Chicago Booth Investment Management Group (IMG) held its annual Chicago Booth Investment Management Conference in the hallowed halls of the University Club of Chicago. Leaders in investment management educated students and alumni on the challenges and opportunities facing investors today.
Lubos Pastor, Chicago Booth Professor of Finance, kicked of the conference by showing how actively managed funds have actually underperformed index funds in the recent past. In 2011, for example, the average equity mutual fund lost 3%, while the S&P 500 gained 2%. He argued, however, that there is hope that active funds will perform better in the coming years as money flows to index funds and competition in the active management space decreases.
Throughout the day, the inflation outlook and investing in commodities and gold were overarching topics across speakers. Mihir Worah, Managing Director & Head of Real Return at PIMCO, warned that current low interests, high commodity prices and high debt/GDP ratios in the US and in Europe may likely cause higher inflation in the coming years. He then explained how investing in commodities, gold, TIPS and foreign exchange can actually provide positive returns when inflation is high. Echoing Mihir's remarks, Joe Wickwire, commodities and gold fund manager from Fidelity, stressed the importance of investing in commodities and in gold, highlighting that the price of gold typically rises when real interest rates are below 3% (today ~ -1.86%).
Gus Sauter, Chief Investment Officer at Vanguard, provided interesting details on ETFs in his speech titled ETFs: Guilty or Innocent, such as the fact that every day in the last 15 minutes of trading, ETFs purchase or sell stocks to rebalance their market exposure.
Finally, the conversation took a more interactive turn, as John Rogers, Founder, Chariman & CEO of Ariel Investments chatted about value-investing with Chad Syverson, Chicago Booth Professor of Economics. John talked about the challenges and rewards of being a contrarian investor, and explained how he balances quantitative equity analysis with qualitative research, such as meeting with company management and noticing how much people love what they are doing and how much they can articulate why they love doing it.
Other speakers throughout the day included Ryan Blute from PIMCO, Geoff Jones from Tennenbaum Capital, David Lee from the Capital Group, and Chris Fitze from Earnest Partners, who discussed opportunities in corporate credit.
At the end, students got a chance to network with the presenters.