Transcript:

It’s not like we can look back in history and say, well, what happened all the other times that interest rates were negative, because this is a live experiment.

When you have a puzzle and you move one piece of that puzzle, it’s not like the rest of the puzzle reacts as if that one piece wasn’t moved, and I think it’s important to realize that if low interest rates and QE and zero percent and negative interest rates, they’re all different movements of that puzzle and we don’t necessarily know what the next move is.

It’s AB’s view that these policies really haven’t worked. And it’s interesting that the central banks themselves are actually coming out, and they’re not saying that we agree with you AB, but they’re at least saying, I think it’s time for some self-reflection on whether or not these policies are working.

It has been since the financial crisis in 2008 that monetary policy has moved to a very aggressive framework, and we’re just starting to see the discussions around whether or not that’s going to change. And it might change for different reasons. It might change in Japan, because they think the efficacy of the policy is questionable. It might change in the US because, you know what, after eight years of this, maybe it’s time to move from emergency to just aggressive policy.

I don’t think that we should sit here and believe that monetary policy potentially changing, fiscal policy potentially changing, that the marketplace is just going to act as if, well, more of the same old, same old—because it’s not the same old, same old.

And with all of this going at the same time where we have election, political changes, all sorts of different policy responses, I’m not sure that just sitting there and saying, well, whatever the market says is the right thing to do—which is essentially what passive investing is doing—is the marketplace is smarter than all the active managers?

I don’t know. With all of that framework, for my money, I’d rather have somebody looking over that investment in an active style.

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.