The Mega-Trend Threats to Passive Investing

Published on
July 16th, 2018
Duration
32 minutes


The Mega-Trend Threats to Passive Investing

The Expert View ·
Featuring Niels Jensen

Published on: July 16th, 2018 • Duration: 32 minutes

Niels Jensen, the CIO of Absolute Return Partners, outlines six mega-trends which he believes will devastate the performance of passive investing over the next decade. While the timing is difficult to predict, the trends are inevitabilities that will require significant tweaks to long term portfolio construction. Filmed April 19, 2018 in Twickenham, England.

Comments

  • WA
    Wissam A.
    30 December 2019 @ 09:19
    Could we have Niels back and see what are his current views.
  • HO
    H2 O.
    23 July 2018 @ 04:29
    Would recommend his book “The End of Indexing”. There are a couple of chapters that lay out the argument for why passive flows will start to dry up. Yes, there are some pretty consensus views about demographics, etc, but that shouldn’t overshadow the implications for market structure when/if ETF aum starts to shrink.
  • PD
    Peter D.
    18 July 2018 @ 00:00
    His most interesting observation is that if the entire market is crowded into short trades, there must be opportunities in the long end (eg. 5+ year outlooks). But (other than buying gold as an inflation hedge) it's hard to identify any good risk-adjusted long-term bets.
    • RK
      Robert K.
      19 July 2018 @ 07:23
      ... one could maybe start looking into Europe and Emerging Markets again
    • WM
      Will M.
      22 July 2018 @ 18:52
      Peter, I am still worried about the potential for inflation to remain relatively tame. However the pension fund debacle is occasionally keeping me awake at night....
  • KO
    Kieran O.
    17 July 2018 @ 11:04
    Old guy who has seen a debt and demographics chart cries the end of the world is coming. Seen this a hundred times on this platform. New content please.
    • jS
      jurgen S.
      17 July 2018 @ 14:56
      Klendathu I’m not sure he said the end of the world was coming and I’d love to hear why you think he’s so wrong-let’s hear it.
    • DS
      David S.
      17 July 2018 @ 21:32
      There is a lot of nervousness in the markets for very good reason. Maybe it is difficult to find someone who believes that the markets are going to continue to go up at 10 - 15% per year and who will go on the record. If you find someone let Milton know, I am open to listening. DLS
    • CM
      C M.
      21 July 2018 @ 14:49
      Yea, let's not listen to old guys who have lived through some cycles. Go with the new guys that started investing in 2011. We can call it 1999 redux.
    • WM
      Will M.
      22 July 2018 @ 18:50
      Klendathu, not sure he was predicting "disaster". He was simply proposing a good argument that these stellar returns can't continue. Feels like reversion to the mean is long overdue and Raoul's points on demographics are well aligned with Neils. This platform serves us well to flag debt and fiat currency issues.
  • RM
    Russell M.
    17 July 2018 @ 02:27
    Time to change the segment music.
    • WM
      Will M.
      22 July 2018 @ 18:46
      but at least it wasn't deafening!
  • CM
    C M.
    16 July 2018 @ 21:19
    "We could relatively easily fix these problems...if we let in more immigrants." Sure, go ahead and blow up one's culture and societal cohesion to satisfy an academic model where the prognosticator has no skin in the game. This chap is hopeless...
    • AE
      Alex E.
      17 July 2018 @ 02:02
      So, C.M., how many years of investing experience do you have?
    • CS
      C S.
      17 July 2018 @ 06:33
      I doubt he was born yesterday, Alex.
    • MS
      Michel S.
      20 July 2018 @ 12:08
      Very true,, except for the weak leftist liars destroying class. Really a nice bunch of peoples. They love immigrants so much they should become one them self!!,, and live in beautiful culture of the immigrants they admire so much. :).. Sharias law youpieee .. But they are blinded peoples they won’t even see the différence lolll REALLY we live in a particular eras that will be study for years to come.. Might name the class the power of coward weakness and lies.. I’m long on that :)) .. Have a good day down to earth peoples !..
    • CM
      C M.
      21 July 2018 @ 14:54
      Hate to break it to you, but we are already a country of immigrants. 27% of the US population is immigrants and their US born children. And the #1 and #2 countries for immigrants, India and China.
    • WM
      Will M.
      22 July 2018 @ 18:44
      CM I think you have taken an extreme position here. Immigration will not be a universal answer everywhere. What the US for sure should do is allow more skilled immigrants who will book our GDP and productivity. What we need to stop doing is allowing poor unskilled and low educated immigration who then compete with the lower skilled population and drive down wages and opportunities for those poorer elements. The USA is not in the same position as Germany. Managed immigration can retain social cohesion, its the unmanaged illegal type plus leftist biases toward diverse poor immigration offers that is the threat.
  • SF
    Simon F.
    21 July 2018 @ 15:11
    I wonder whether the linear logic of his assumptions, which are built substantially on historical outcomes and consensus predictions, are such a reliable road map for that greatest of all oxymorons, the foreseeable future? He is right that we have crap demographics and have dragged generations of consumption from the future, but, I think reflexivity and technology will play a substantial part in our attempts to change the course we are on. The whole arc of history would suggest innovation is the reliable mother of invention.
    • SF
      Simon F.
      21 July 2018 @ 15:41
      ...oops, need is the mother of invention
  • NH
    Neil H.
    20 July 2018 @ 17:12
    excellent video. I have been reading Niels writings for many years and they are always thought provoking.
  • RK
    Robert K.
    17 July 2018 @ 12:38
    Very good interview. Also left me pretty depressed ;) Shorting growth against value is something I thought about (and luckily not implemented yet). Maybe we are getting there.
    • JC
      James C.
      20 July 2018 @ 02:28
      Suicide...until it works
  • NO
    Neil O.
    19 July 2018 @ 19:30
    Really intelligent and thought-provoking analysis. Great framework, but executing would be very tricky while maintaining some degree of diversification (though I accept this is a much over-rated concept) and variety of exposures. Would seem to be a natural approach for pension funds, the largest part of his firm's client base, who can readily access the necessary specialist managers. Not sure how smaller pools of assets can benefit from this approach. Any ideas?
  • XP
    X P.
    19 July 2018 @ 09:26
    Looks like he focuses on institutional investors, but retail can access these same strategies via Blu Family Office. Being able to get income via trade financing and other longer term deals looks very interesting as an alternative not usually available to small investors, as long as you can lock up the capital for a while.
  • JA
    James A.
    19 July 2018 @ 07:03
    Great mega long term trends that he identifies and it's hard to disagree with any of the points. As an active investor executing on the ideas is far harder though due to a) timing of trends is so hard to predict and b) access to such investments (I.e. trade finance) is highly specialist and generally only for large pool of capital (family office / pension) and not for those with <$5mn of investable capital .... albeit happy to be proven wrong !
  • GL
    Geoffrey L.
    18 July 2018 @ 17:42
    It seems, re: the rise of the east, that their ability to grow is massively dependent on developed countries purchasing their goods and FDI. A global turndown will seem to have a knock on effect (high five, RV) that would seem to mitigate this effect.
  • SM
    Sarit M.
    16 July 2018 @ 15:42
    Can retail investors invest in trade finance?
    • DS
      David S.
      17 July 2018 @ 21:38
      Thanks, Sarit M. for your comment. It would be nice to have a short trade idea showing the reasoning, trade and his/her picks. DLS
  • BM
    Beth M.
    16 July 2018 @ 22:02
    Raoul, just wondered why this was filmed in mid-April but not released until mid-July? Excellent interview...thanks.
    • RP
      Raoul P. | Founder
      17 July 2018 @ 11:04
      Because it’s not necessarily timely,.. we film a number of interviews like this that give us a buffer if an interview scheduled isn’t ready or of the quality.
  • CS
    C S.
    17 July 2018 @ 07:07
    Wonder if he had any love for commodities? Perhaps Uranium, if electric was the go.
  • CB
    C B.
    16 July 2018 @ 19:43
    Thank you for sharing your views. I feel like I am hearing a long dollar argument embedded into these views.
  • jS
    jurgen S.
    16 July 2018 @ 19:41
    Really liked his common sense approach and his thoughts on how this might all play out. I’m glad someone is finally talking about the end of the debt cycle as no one else seems to be. Most so called experts all play down the debt but this gentleman nails it. Hasn’t heard of him before but loved this one. Thanks RV. By the way what’s happened to Grant???
  • SS
    Sam S.
    16 July 2018 @ 13:13
    Just Fantastic! Excellent work as macro future and actionable info. Thank you!

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yuskois the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets. Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office.Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation. Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authoredThe Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot onThe NewYork TimesBest Sellers list. Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offeringwhichutilizesa true online brokerage model that self-directed investors and traders have come to expect for equities, futures,and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovativeways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring.James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

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Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full timejournalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of humaninterest recordings, documentaries and films Peter has recently launched theDefiancepodcast andDefianceTV.

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Bitwise Asset Management, CEO

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Luke Gromen

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Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst.He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clientsand former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients.Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14.At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”)for the firm’s clients.Prior to that,Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006.While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in whichhe aggregated and combined proprietary research from Midwest with inputs from other sources.Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University.He earned the CFA designation in 2003.

Meltem Demirors

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