Leadership is about establishing direction while also improving, aligning, and motivating the team. In good times, these goals are challenging enough, but in times of uncertainty, where we find ourselves now, it demands flexibility, curiosity about alternative routes, and willingness to solicit input from the diverse perspectives of the team.
All companies are getting walloped in the current market. Which stocks are the true bargains, likely to outperform when the market rebounds? Chris Brightman explains that the outlook for a company’s prospects can be very different from the outlook for its stock’s performance.
Rob Arnott shares his perspective on the ongoing market crisis. He suggests the time to buy is when investors are at “peak fear.” In the weeks ahead, that point will come and bargains will make themselves self-evident to the disciplined investor. The window of opportunity will be short, but highly rewarding over the longer term.
Cam Harvey explains why the Fed's latest interest rate cut didn’t calm investors’ fears and offers his insight into the steps policy makers can take to encourage stability so markets find a floor. He also builds on his earlier analysis of the economic impact of the market downturn and compares this crisis with past financial crises.
Feifei Li, Head of Equities, reiterates that even before coronavirus fears triggered the market downturn, Research Affiliates’ expected return models indicated a zero 10-year real return for US large caps. Will returns move into negative territory? Stay up to date with Research Affiliates Asset Allocation Interactive tool. Read Transcript
The spreading coronavirus is impacting market conditions and long-term opportunities. In this 20-minute audio clip, Rob Arnott, Chairman, and Chris Brightman, Chief Investment Officer, offer their latest insights to help investors make informed investment decisions in these turbulent markets.
The macroeconomy, credit conditions, capital markets, and politics are all flashing warning signs that the capital markets may be near an inflection point. COVID-19 may be the tipping point that triggers the what’s-this-worth question many investors ask all at once. Under market pressure, what is your portfolio really worth?
Value investing has underperformed growth investing for over 12 years with a -39.1% drawdown from peak to trough using the classic Fama–French definition of the value factor. The drawdown is explained by value becoming unusually cheap relative to growth with the valuation now in the 97th percentile of the historical distribution.
Jason Hsu and Vitali Kalesnik discuss which definitions of the quality factor are robust and have been shown to generate a return premium based on their Graham and Dodd award-winning article. Their findings suggest a link between the quality factor and ESG investing.
2019 Investment Symposium
Chasing returns can be very costly. High valuations can go higher, but not indefinitely. At Research Affiliates’ recent London Symposium, Rob Arnott explains how the link between starting valuations and subsequent returns is powerful, and examines which investments look attractive today.
CEO transitions are a great time to focus on refining the enduring formula of a firm’s success. Katrina Sherrerd's formula has three equally important elements: mission, culture, and team. The result are win-win-win outcomes—that is, a win for our end investors, a win for our distribution partners, and a win for ourselves.
Over the last 15 years, factor returns have not delivered on investors’ expectations. Are factors broken or far riskier than investors believe? Investors could dismiss the approach based on recent poor performance, but perhaps a better path would be to gain an understanding of three risks associated with factor investing. Doing so can help investors form more realistic return expectations.
We believe a solid understanding of the specific underlying return drivers of ARP strategies can improve investors’ odds of maximizing the long-run investment opportunity of ARP investing.
Machine learning provides the investment industry with a new set of tools. However, investors need to be cautious. Machine learning is being hyped and sometimes misapplied.
Vitali Kalesnik discusses factor investing and how the ETF landscape has changed the way we talk about markets, value, and growth.
October 18, 2018
Winner of the 2018 Bernstein Fabozzi/Jacobs Levy Award for Best Article
Valuation, always an effective tool for long-term investors, can also be useful for assessing short-term market prospects. The authors demonstrate that conditioning CAPE on current inflation and real yields substantially improves its accuracy in forecasting returns for periods from one month to one year.
Published in the Journal of Portfolio Management by Rob Arnott, Tzee Chow, and Denis Chaves.
Recognizing that the management of taxable portfolios has advanced in the past 25 years, the authors of the present paper update a seminal 1993 study in which Robert H. Jeffrey and Robert D. Arnott introduced the concept of a normally negative “tax alpha” and formulated tactics to reduce its detrimental impact on investment results.
Winner of the 2016 Graham & Dodd Scroll Award Of Excellence Paper
Not every factor profits investors when implemented through a passive strategy. Size and quality show weak robustness, and liquidity-demanding factors, such as illiquidity and momentum, are associated with high trading costs.
Published in the Financial Analysts Journal by Jason Hsu, Vitali Kalesnik, Noah Beck, and Helge Kostka.
All of the well-established factors to which investors gain exposure in low-cost smart beta funds are expected to deliver a premium in the long run, but none is guaranteed to outperform at all times. Seeking diversification, many investors have turned to strategies that exploit multiple factors. Published in the Journal of Index Investing.
Many investment organizations benchmark their funds’ performance against the classic 60/40 mix of domestic stocks and bonds, but this posture limits their ability to earn superior risk-adjusted returns. The authors argue that investors can fully realize the well-established benefits of asset-class diversification only if they are seriously willing to revisit their policy portfolios, investment guidelines, and benchmarks.
Bernstein Fabozzi/Jacobs Levy Award Winner
April 11, 2019
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Graham and Dodd Award Winner
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