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M*: The Long View: Guest: Rob Arnott: Don't Sleep on Value Investing (Especially Emerging-Markets

TedTed
in Fund Discussions
FYI: Our guest on the podcast today is Rob Arnott. Arnott is partner and chairman of the board of Research Affiliates, a firm he established in 2002, following stints at First Quadrant and Salomon Brothers. He also runs several prominent mutual funds, including PIMCO All Asset. In addition to these duties, Arnott is an accomplished thought leader, having published more than 100 articles in professional journals. Among other plaudits for his work, he has received seven Graham and Dodd Scrolls, awarded by the CFA Institute to the top financial analyst journal articles of the year. An innovator, Arnott popularized the concept of fundamental indexation, which some refer to as smart beta.
Regards,
Ted
https://www.morningstar.com/articles/943058/arnott-dont-sleep-on-value-investing-especially-emerging-markets-value

Comments

  • golub1
    Thanks Ted. this was a very informative article. I hold a few fundamental Index funds from Schwab. I think these are the same as the Pimco s fundamental index funds. However Arnott didn't mention Schwab when he mentioned the funds that were licensed by him. Does anyone know whether they are licensed by Schwab but branded with their name. They appear to me to be similiar.
  • BenWPBenWP
    I also found this transcript of a podcast to be fascinating reading, maybe the best explanation of how hard it is to be a value investor. You have to be a "maverick." Fear of missing out and disgust at holding a fund that is not currently out performing are emotions that can lead us to make unwise buy and sell decisions. I am certainly guilty on these counts.

    Arnott points out that an active manager can succeed only if another active manager is losing; in other words there has to be a loser on the other side of the trade.

    The other point that I found useful is that if you get into an undervalued sector, such as EM, you need to buy in systematically as the asset declines and then be ready to unload it, perhaps gradually, as it appreciates. For me, this suggests that a blind buy-and-hold strategy won't cut the mustard, at least not in EM, the asset he identifies as most undervalued today. PRIJX would be my choice for an MF to buy. Fear and disgust may need to be set aside in favor of Arnott's quite convincing arguments. He also seems humble, noting the periods when his ideas have been excoriated. That's a quality to emulate.
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