Gross: Active Management Would Fare Better In Bear Market

The transcript discusses the impact of financial repression on investment returns, highlighting the challenges faced by active managers in a low interest rate environment. It suggests that a normalized interest rate could benefit asset management, insurance companies, and banks. The discussion also covers the potential shift from passive to active management in bear markets, emphasizing the need for the financial asset management industry to adapt.

What is the expected return for equities in the current environment according to the transcript?

• Mid single digits

• Negative returns

• High double digits

• Low double digits

Why is alpha generation challenging in a zero interest rate environment?

• Because of high inflation

• Due to increased competition

• Because indices yield very low returns

• Due to regulatory constraints

How would a normalized interest rate environment benefit financial managers?

• By increasing inflation

• By increasing regulatory oversight

• By reducing competition

• By making it easier to generate returns above an index

In what market conditions do active stock managers tend to outperform passive managers?

• Bull markets

• Bear markets

• Stable markets

• Volatile markets

What is the critique of the financial asset management sector mentioned in the transcript?

• It lacks innovation

• It is under-regulated

• It is dramatically overpriced

• It is too competitive