Note from the CEO: Now this? As an old (er, experienced) trader I have a tear in my eye. First markets got really efficient, next they take the trading floors away, next the robots take over and now developers replace traders. Well, let’s see how THAT works at the bar in the lobby. Hi, I’m a trader (Oh hi big spender) OR, hi I’m a developer (Oh, get lost). New world.
“………..Anyhow, the reason this is interesting is that….the trading rooms of the banks are ejecting talent faster than Angelina Jolie is getting rid of the Pitts. I’ve been saying for a long time that the future will be trading by machine, especially as most active managers are no more effective at investing than an ape.
So far this year, active fund managers have seen over $35bn move from their hands to those of the ETF machines. In a March 2016 article, MorningStar reports of ‘Flowmageddon’:
PIMCO has seen a remarkable $35bn in outflows through the 12 months ended February 2016. A striking 18 Morningstar 500 funds suffered outflows of at least 40% of assets under management in the trailing 12 months ended February 2016, 61 shed 25% or more, and 168 had outflows of 10% or more. Also, in January we saw something we rarely see: a firm that subadvises a fund was liquidating. It isn’t just that TAMRO was merging into another fund, but that TAMRO was closing up shop. Two years ago, the firm was running $1.3bn. One year ago, it was running $800 million, but at year-end 2015, it was down to $150 million.”