The last decade came to a close with us in the midst of a bull market in for the ages, while that was great, what's next? Will the good times continue to roll? Or, will the 2020’s be a lost decade for returns? Or something in between? To help chew on this, I was happy to welcome back Rob Arnott, Chairman of Research Affiliates to the podcast. If you are not familiar with Rob, despite his fancy titles, he plays an active role in the firm’s research, portfolio management, product innovation, business strategy, and client-facing activities. He has pioneered several unconventional portfolio strategies that are now widely applied, such as tactical asset allocation, global tactical asset allocation, tax-advantaged equity management, and the Fundamental Index™ approach to investing. His success in doing so has resulted in a reputation as one of the world’s most provocative practitioners and respected financial analysts. During our conversation about what the next decade could hold for the financial markets, he shares the difference between a nowcast and a forecast, some amusing “death of” statements, inflation, and a few truisms. He also provides the best explanation I have heard of yet about negative interest rates and their impact on individuals, economies, and the markets.
Before we get started, if you a new to the podcast, don’t forget to check out our nearly 200 prior episodes with expert guests like Rob. You can easily scroll through them and listen on-demand on your favorite podcast app, if you are looking for something specific and can’t find, shoot me an email to email@example.com and we will see what we can do to tackle it in a future episode.
For the episode transcript, bonus questions and more go to www.401kfridays.com/arnott2020
Rob Arnott is the founder and chairman of the board of Research Affiliates, a global asset manager dedicated to profoundly impacting the global investment community through its insights and products. The firm creates investment strategies and tools based upon award-winning research, and delivers these solutions in partnership with some of the world’s premier financial institutions. Rob plays an active role in the firm’s research, portfolio management, product innovation, business strategy and client facing activities. With Chris Brightman, he is co-portfolio manager on the PIMCO All Asset and All Asset All Authority funds and the PIMCO RAE™ funds.
Over his career, Rob has endeavored to bridge the worlds of academic theorists and financial markets, challenging conventional wisdom and searching for solutions that add value for investors. He has pioneered several unconventional portfolio strategies that are now widely applied, including tactical asset allocation, global tactical asset allocation, tax-advantaged equity management, and the Fundamental Index™approach to investing. His success in doing so has resulted in a reputation as one of the world’s most provocative practitioners and respected financial analysts.
In 2002, Rob founded Research Affiliates as a research-intensive asset management firm intent on delivering innovative and impactful products and insights. Using a unique business model, Research Affiliates delivers investment solutions globally in partnership with leading financial institutions. Rob served as chairman and CEO from 2002 to 2018.
Prior to establishing Research Affiliates, Rob managed two asset management firms. As chairman of First Quadrant, LP, he built up the former internal money manager for Crum & Forster into a highly regarded quantitative asset management firm. He also was global equity strategist at Salomon Brothers (now part of Citigroup), the founding president and CEO of TSA Capital Management (now part of Analytic Investors, LLC), and a vice president at The Boston Company.
Rob has published more than 130 articles in such journals as the Journal of Portfolio Management, Harvard Business Review, and Financial Analysts Journal, where he also served as editor in chief from 2002 through 2006. In recognition of his achievements as a financial writer, Rob has received seven Graham and Dodd Scrolls, awarded annually by CFA Institute to the top Financial Analysts Journal articles of the year. He also has received four Bernstein Fabozzi/Jacobs Levy awards from the Journal of Portfolio Management. He is co-author of The Fundamental Index: A Better Way to Invest(Wiley 2008).
Rob Arnott received a BS summa cum laude in economics, applied mathematics, and computer science from the University of California, Santa Barbara.
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