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The Death of the Dollar?
by Rob Arnott of Research Affiliates, 12/14/12
Rob Arnott, Chairman and CEO of Research Affiliates, has released an "Insights" paper in which he discusses the possible "Death of the Dollar" in the decade ahead. He points out that: "If we're spending $1 trillion a year more than we produce as a nation (the national deficit) and are financing it by printing $1 trillion a year of crisp newly printed bills (actually, bits in a computer), we're on a dangerous path. Printing our own money to buy our own debt works fine until it doesn't."

The Glidepath Illusion
by Rob Arnott of Research Affiliates, 9/25/12
Young adults should buy stocks; mature adults should favor bonds. Or so we're taught. In this month's Fundamentals, Rob Arnott takes a serious look at Glidepath strategies used within target-date funds and comes up with some surprising findings.

Inevitabilities - One Down, More to Come
by Rob Arnott of Research Affiliates, 8/9/11
With government sponsored post-retirement safety nets increasingly looking not so safe, the implications for U.S. retirement assets are vast. According to the Investment Company Institute, the U.S. retirement market stood at $18 trillion at the end of the first quarter 2011, or 37% of household net worth. This pool of assets will soon be asked to do much, much more. Unfortunately, this greater load sharing comes at a time when capital markets are priced to deliver shockingly anemic returns. But we can start planning for the burden now.

The Biggest Urban Legend in Finance
by Rob Arnott of Research Affiliates, 3/29/11
Stocks ought to produce higher returns than bonds in order for the capital markets to ?work.? Otherwise, stockholders would not be paid for the additional risk they take for being lower down the capital structure. It comes as no surprise, therefore, that stockholders have enjoyed outsized returns for their efforts for most - but not all - long time periods.

Little Things Make Big Things Happen
by Rob Arnott of Research Affiliates, 2/25/11
People are often surprised when we explain that our Fundamental Index methodology utilizes trailing five years of financial data to determine fundamental weights. Why give any weight to 2006 data when we already have data from 2010? We understand that individual companies often experience results in a given year that are far ahead or far behind where they were five years ago. Google and Ford provide two vivid examples. However, history clearly shows that relying solely on the most recent financial information leads to worse performance than using stale data.

The RAFI Five-year Scorecard
by Rob Arnott of Research Affiliates, 1/28/11
When the Fundamental Index concept was introduced, it was met with fierce attacks. Critics decried its backtested results as data-mining or said the approach was just a repackaged value investment process. Five years after the first RAFI indices went live, the proof is in: The methodology has generated superior performance during a period when value has lagged growth all over the world.

A Smoother Ride for Target-date Funds
by Rob Arnott of Research Affiliates, 12/23/10
Asset allocation is a critical step in the asset management process. No matter how diversified the portfolio, risk and reward aren?t linear. But target-date funds tacitly assume they are! Just because you are willing to take more risk doesn?t preordain higher returns, even over decades-long stretches. Rather, managing risk should be done either explicitly with active asset allocation of the glide path or implicitly through the natural contra-trading embedded in the Fundamental Index approach.

The Glad Game
by Rob Arnott of Research Affiliates, 11/23/10
In a world of low-single digit yields, a conventional 60/40 asset mix will get pension funds just over halfway toward an expected 8% return. But investors should not wring their hands: there are ways of achieving their return expectations.

Are 401(K) Investors Fighting Yesterday's War?
by Rob Arnott of Research Affiliates, 9/27/10
It is time for investors and their advisors to look forward, not backward, in their 401(k) investment planning. Inflation is the biggest single enemy to long-term investors. A portfolio of real return assets balanced with a stock- and bond-heavy 401(k) fund menu is the best way to build a portfolio for an uncertain future. To do this, one needs to include inflation hedges before inflation strikes and when they are least costly.

Debt Be Not Proud
by Rob Arnott of Research Affiliates, 8/27/10
The looming sovereign debt crisis may be the defining influence on capital market returns over the next 10 years. Greece recently hit a wall and had to break a lot of promises to its citizens, including retirees and prospective retirees from government employment. Greece certainly won't be the last. An exploration of the relationship between sovereign debt levels and the economic might of debtor nations reveals a scary situation, particularly for investors who cap weight their government bond market exposure.

The Style Roulette and RAFI Strategy
by Rob Arnott of Research Affiliates, 7/26/10
The style merry-go-round (where value and growth are alternatively in favor) provides ample opportunity for investors to be their own worst enemy, even within the supposedly balanced broad market indexes. Make no mistake - cap-weighted index funds are stealthy returns chasers loading up on past winners. A simple periodic realignment back to financial size remarkably captures over 100 percent of a perfect style timing strategy in three major non-U.S. equity asset classes.

Too Big to Succeed
by Rob Arnott of Research Affiliates, 6/10/10
Can companies become 'too big to succeed?' When you're number one, you have a bright target painted on your back. Competitors are gunning for you. Governments and pundits are gunning for you. In a world that generally roots for the underdog, hardly anyone outside of your own enterprise is cheering for you to rise from world-beating success to still-loftier success. Indeed, past returns suggest that an investor could do rather well by investing in the Russell 1000, minus its 12 sector leaders, thus cancelling the corrosive influence of competitors, populists, and pundits.

Fifty Years of Popularity Weighted Indexing
by Rob Arnott of Research Affiliates, 4/26/10
For all but a few, fame and favor is fleeting. This holds true for fashion and for stocks. The top of the capitalization index is filled with companies that are at the height of their popularity and, judging by the amount of fallen angels, due for a fall. By contrast, the fundamental index approach, which selects stocks based on economic scale rather than market capitalization, is immune to the way that popularity pushes select stocks' prices - and portfolio weights - into the stratosphere.

The Folly of Peer Group Analysis
by Rob Arnott of Research Affiliates, 3/19/10
The global financial crisis has led to a significant remake of the active manager opportunity set, but don?t let the ever-shifting sands of survivorship and backfill biased peer group returns fool you. Indexing is a smart bet. Importantly, if you want to be a ?survivor,? remember the biases of peer groups because what may look like a smart active manager ?alliance? could turn out to be a vote off the island of investment success?caveat emptor!

Lessons from the 'Naughties'
by Rob Arnott of Research Affiliates, 3/1/10
Sizeable real returns will be difficult in this decade, as they were in the last. Almost all asset classes are priced richly relative to historical norms. We can tilt the odds back in our favor, however, by tactically altering our portfolio risk based on measures as simple as yields and yield spreads. The surest path to success marries tactical asset allocation with a more efficient beta, such as the Fundamental Index methodology, and a full toolkit of alternative markets.

Discounts and Relative Performance
by Rob Arnott of Research Affiliates, 2/5/10
Arnott reviews the methodology behind fundamental indexing. Over the short term, fundamental indices take on much greater exposure in volatile markets to companies which underperformed relative to their economic size. This article explores the performance implications of the difference in relative valuation multiples.

Was it Really a Lost Decade?
by Rob Arnott of Research Affiliates, 1/23/10
?In this issue we study this abysmal stretch of portfolio performance, both to glean long-term lessons for how we allocate assets and structure equity indexes and to consider whether the ?naughts? mig
Results 51–67 of 67 found.