The Fundamental Index™:
Is it Just Repackaged “Value”?
IQRF “Q” Group
March 27, 2007
Rob Arnott / arnott@rallc.com
This presentation was created by Research Affiliates. This presentation contains the current opinions of the presenter, which are subject to change without notice. This
presentation does not represent a recommendation of any particular security, strategy or investment product.
Please see disclosure slide for more information
For Educational Use Only
Important Information






No disclosure may be made to third parties (including potential co-investors) regarding any information disclosed in
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agree not to disclose information regarding the transactions to anyone within your organization other than those
required to know such information for the purpose of analyzing or approving such participation.
The material contained in this document is for information purposes only. This material is not intended as an offer or
solicitation for the purchase or sale of any security or financial instrument, nor is it advice or a recommendation to enter
into any transaction. The information contained herein should not be construed as financial or investment advice on
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herein, either expressed or implied, for any particular purpose. Nothing contained in this material is intended to
constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment,
nor a solicitation of any type. The general information contained in this material should not be acted upon without
obtaining specific legal, tax and investment advice from a licensed professional. Indexes are unmanaged and cannot be
invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not
indicative of any specific investment.
Any information and data pertaining to indexes contained in this document relates only to the index itself and not to any
asset management product based on the index. No allowance has been made for trading costs, management fees, or
other costs associated with asset management as the information provided relates only to the index itself. With the
exception of data on Research Affiliates Fundamental Indexes, all other information and data are based on information
and data available from public sources.
Any inquiries relating to the transactions should be directed to Research Affiliates, LLC.
The trade names Fundamental Index, Fundamental Indexing, RAFI, RAFI-Global, Fundamental Global, Fundamental K,
Fundamental Q, Fundamental REIT, Fundamental 100, Fundamental 200, Fundamental 250, Fundamental 1000,
Fundamental 2000, Fundamental 3000, Global Fundamental, Research Affiliates, Mainstreet Index, Mainstreet Indexing,
Synthetic Strips, Virtual Mutual Fund, the RAFI logo and the Research Affiliates corporate name and logo are the
exclusive intellectual property of Research Affiliates, LLC. Any use of these trade names and logos without the prior
written permission of Research Affiliates, LLC is expressly prohibited. Research Affiliates, LLC reserves the right to
take any and all necessary action to preserve all of its rights, title and interest in and to these terms and logos.
Fundamental Index™, the non-capitalization method for creating and weighting of an index of securities, is the patentpending proprietary intellectual property of Research Affiliates, LLC (Patent Pending. Publ. Nos. US-2005-0171884-A1,
US-2006-0015433-A1 and WO 2005/076812).
For Educational Use Only
Please see disclosure slide for more information.
2
Malkiel / Exhibit 20
How Persistent is the Value Effect?
RAFI™ graph
not to scale …
would be well
off top of page!
RAFI vs S&P 500
RAFI™ 12.7%
RAFI™ tracks Growth/Value Cycle, but beats
S&P far more often than value beats growth!
Malkiel / Exhibit 21
How Persistent is the Size Effect?
RAFI™ barely tracks Large/ Small
Cycle, and beats S&P far more
often than small beats Large!
RAFI vs S&P 500
RAFI™ 1000: 15.2%
RAFI™ 2000: 15.7%
Our Biggest Bets are in Equities –
Is Theory Leading Us Astray Here?
Please see disclosure slide for more information
The Return Drag of Cap-Weighting
 The Efficient Markets Hypothesis
 Price identically equals fair value for all assets at all times
 Hardly anyone believes this
 If price equals true fair value plus or minus an error …
 Overvalued will have higher market capitalization and higher
valuation multiples than they should
 This creates the size and value effects
 How likely is it that the top ten in market cap and the
top ten in true fair value will be the same stocks?
 Some of the top market cap get there through pricing error
 None get there as a consequence of being undervalued!
For Educational Use Only
Please see disclosure slide for more information.
6
Problems with Cap Indexes

Introduces substantial growth bias

Fully participates in every market bubble

Fully participates in every market decline

Stocks selected by a committee (S&P, MSCI)
• Or by formulas which are closely-guarded secrets

Most turnover is in the smallest names
But the most important problem—

Over weights all over priced stocks

Under weights all under priced stocks
For Educational Use Only
Please see disclosure slide for more information.
7
Alternative Measures of Size



Main Street uses Fundamentals:
• Income or Cash Flow
• Sales or Revenues
• Book Equity Value (Shareholders Equity)
• Gross Dividends Paid
Creating an Index based on “Fundamentals”
• An equity Index of 1000 stocks
• Companies selected by fundamentals
• Companies ranked by fundamentals
• Companies weighted by fundamentals
This a Valuation-indifferent Index
• Strips away linkage between portfolio weight
and any over- or under-valuation
For Educational Use Only
Please see disclosure slide for more information.
8
Stocks at the Top Tend to Underperform
Here’s
Here’s where
where 20-25%
20-25% of
of the
the index
index is
is invested
invested …
…
What % of the top 10 outperformed the market average?
1 Year
3 Year
5 Year
10 Year
1926-2006
44%
40%
37%
31%
1964-2006
38%
35%
30%
27%
By What Amount Did the Top 10 Underperform?
1 Year
3 Year
1926-2006
-2.9%
-11.1%
1964-2006
-3.6%
-15.9%
5 Year
-17.7%
-24.9%
10 Year
-29.4%
-37.0%
Source: Research Affiliates, LLC
For Educational Use Only
Please see disclosure slide for more information.
9
Comparison of Indexes
US Fundamental Index 1000 vs. Cap Weighted US 1000
$220
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
Dec-61
Dec-70
Dec-79
RAFI™ US 1000
For Educational Use Only
Dec-88
Dec-97
Dec-06
Cap Weighted US 1000
Please see disclosure slide for more information.
10
How Well Does
the Fundamental Index™ Work?
1962-2006 Results
Ending Value
of $1
Ann. Return
Vol.
Sharp Ratio
Excess Return
vs REF CAP
Excess Return
t-stat
S&P 500
Cap 1000
Book
Cash Flow
Sales
Gross Dividend
RAFI™ Composite
85.16
82.50
177.04
207.49
240.03
166.45
200.60
10.38%
10.30%
12.19%
12.59%
12.95%
12.04%
12.50%
14.74%
14.95%
14.64%
14.65%
15.53%
13.39%
14.48%
0.32
0.31
0.44
0.47
0.47
0.47
0.47
0.08%
-1.89%
2.28%
2.65%
1.73%
2.20%
0.305
-3.544
3.874
3.584
2.204
3.582
* Returns from 12/31/1961 – 12/31/2006. RAFI™ Composite 1000 composed of the 4 equally-weighted
measures of book value, dividends, sales and income (called RAFI™ in later slides).
For Educational Use Only
Please see disclosure slide for more information.
11
RAFI
™ vs. Reference Cap 1000:
RAFI™
Rolling 5-Year Annualized Returns
For Educational Use Only
Please see disclosure slide for more information.
12
Composition and
Sector Allocation Stability
Please see disclosure slide for more information
Twenty Largest Holdings on 12 / 31 / 2006
Free Float Market Capitalization
Research Affiliates Fundamental Index™
GENERAL ELECTRIC CO
2.94%
EXXON MOBIL CORP
2.89%
EXXON MOBIL CORP
2.82%
GENERAL ELECTRIC CO
2.66%
CITIGROUP INC
1.97%
CITIGROUP INC
2.12%
MICROSOFT CORP
1.92%
MICROSOFT CORP
1.83%
PROCTER & GAMBLE CO
1.54%
BANK OF AMERICA CORP
1.67%
BANK OF AMERICA CORP
1.45%
WAL-MART STORES INC
1.67%
JOHNSON & JOHNSON
VERIZON COMMUNICATIONS INC
1.59%
PFIZER INC
1.36%
41%
ALTRIA GROUP INC
1.53%
AMERICAN INTERNATIONAL GROUP INC
1.24%
PFIZER INC
1.45%
ALTRIA GROUP INC
1.22%
CHEVRON CORP
1.41%
INTEL CORP
1.22%
JPMORGAN CHASE & CO
1.33%
JPMORGAN CHASE & CO
1.10%
AT&T INC
1.31%
INTERNATIONAL BUSINESS MACHINES CORP
1.05%
GENERAL MOTORS CORP
1.12%
CHEVRON CORP
1.01%
FORD MOTOR CO
1.06%
WAL-MART STORES INC
0.93%
AMERICAN INTERNATIONAL GROUP
1.06%
CISCO SYSTEMS INC
0.88%
JOHNSON & JOHNSON
0.88%
WELLS FARGO & CO
0.83%
INTL BUSINESS MACHINES CORP
0.88%
PEPSICO INC
0.78%
WELLS FARGO & COMPANY
0.80%
AMGEN INC
0.78%
MERCK & CO. INC.
0.79%
AT&T INC
0.75%
PROCTER & GAMBLE CO
0.75%
*RAFI Reference Cap 1000 Index and RAFI 1000 Index. CAP 1000 uses float-weighting .
For Educational Use Only
Please see disclosure slide for more information.
14
Rotation in the Top 10, Cap Weighted
CAP WEIGHTING, TOP 10 LISTS, 1/1965-1/2007
Rank
1
2
3
4
5
6
7
8
9
10
Jan-65
Jan-70
Jan-75
T/SBC
GM
IBM
T/SBC
T/SBC
IBM
J/XOM
IBM
TX/CVX
DD
S
GE
GO/CVX
EK
GM
EK
J/XOM
S
TX/CVX
XRX
GE
GO/CVX
J/XOM
EK
GM
S
PG
GE
SN/AN
TX/CVX
Green = New to top 10
For Educational Use Only
Jan-80
Jan-85
IBM
T/SBC
IBM
XON/XOM
XON/XOM
GM
SN/AN
MOB/XOM
GE
SD/CVX
ARC/AN
SUO
GE
GM
T/SBC
SUO
SN/AN
DD
S
EK
Jan-90
XON/XOM
GE
IBM
T/SBC
MO
MRK
BMY
DD
SN/AN
BLS
Jan-95
GE
T
XON/XOM
KO
MO
WMT
MRK
IBM
PG
DD
Red = Falling off top 10
Please see disclosure slide for more information.
Jan-00
MSFT
GE
CSCO
WMT
XOM
INTC
LU
IBM
C
AOL
Jan-05
GE
XOM
C
MSFT
PFE
BAC
JNJ
IBM
AIG
INTC
Blue
=
J a n - 0 7 Fallen Angels
XOM
26
GE
Changes:
C
30
MSFT
Flip/Flops:
BAC
15
PG
Leads RAFI:
JNJ
23
PFE
Lags RAFI:
MO
41
JPM
Flip/Flop
15
Rotation in the Top 10, RAFI
FUNDAMENTAL INDEXING, TOP 10 LISTS, 1/1965-1/2007
Rank
1
2
3
4
5
6
7
8
9
10
Jan-65
Jan-70
Jan-75
GM
T/SBC
T/SBC
GM
T/SBC
GM
J/XOM
F
TX/CVX
DD
GE
S
IBM
SD/CVX
J/XOM
J/XOM
F
IBM
IBM
TX/CVX
TX/CVX
F
GO/CVX
GO/CVX
M O B / X O M MOB/XOM
GE
SD/CVX
S
S
Green = New to top 10
For Educational Use Only
Jan-80
Jan-85
Jan-90
Jan-95
T/SBC
GM
T/SBC
XON/XOM
XON/XOM
IBM
XON/XOM
IBM
XON/XOM
IBM
MOB/XOM
F
TX/CVX
GE
GO/CVX
IBM
GM
MOB/XOM
TX/CVX
SN/AN
CHV/CVX
GE
DD
GM
F
T/SBC
MOB/XOM
GE
DD
CHV/CVX
SN/AN
GM
F
GE
T/SBC
MOB/XOM
MO
DD
CHV/CVX
SD/CVX
Red = Falling off top 10
Please see disclosure slide for more information.
Jan-00
XOM
F
GE
GM
C
T/SBC
MO
FNM
WCOM
IBM
Jan-05
XOM
C
GE
WMT
FNM
BAC
T/SBC
CVX
GM
AIG
Blue
=
J a n - 0 7 Fallen Angels
XOM
10
GE
Changes:
C
17
MSFT
Flip/Flops:
BAC
2
WMT
Leads CAP:
VZ
41
CVX
Lags CAP:
MO
23
PFE
Flip/Flop
16
Sector Weights Over Time,
Capitalization Weighting
100%
Retail
Portfolio Composition
90%
Non-Dur
80%
Chem
70%
Health
60%
Finance
Energy
50%
Dur
40%
Manu
30%
Elec. Eq.
20%
Telcom
Util
10%
0%
1962 1966
Other
1970 1974 1978 1982
For Educational Use Only
1986 1990 1994 1998
Please see disclosure slide for more information.
2002 2006
17
Sector Weights Over Time,
Fundamental (Composite) Weighting
100%
Retail
90%
Non-Dur
Portfolio Composition
80%
Chem
70%
Health
60%
Finance
Energy
50%
Dur
40%
Manu
30%
Elec. Eq.
20%
Telcom
Util
10%
0%
1962 1966
Other
1970 1974 1978 1982
For Educational Use Only
1986 1990 1994 1998
Please see disclosure slide for more information.
2002 2006
18
How Well Does the
Fundamental Index™ Concept Work
Outside of the US?
Please see disclosure slide for more information
Value Added, Fundamental Indexes™ vs.
Capitalization Index, Price Only, 1988-2005
2.2
Canada
2.0
Greece
1.8
Austria
1.6
1.4
1.2
1.0
New
0.8
0.6
Zealand
Finland
20
05
12
20
04
12
20
03
12
20
02
12
20
01
12
20
00
12
19
99
12
19
98
12
19
97
12
19
96
12
19
95
12
19
94
12
19
93
12
19
92
12
19
91
12
19
90
12
19
89
12
19
88
12
19
87
12
0.4
AUSTRALIA
AUSTRIA
BELGIUM
CANADA
DENMARK
FINLAND
FRANCE
GERMANY
GREECE
HONG KONG
IRELAND
ITALY
NETHERLANDS
NEW ZEALAND
NORWAY
PORTUGAL
SINGAPORE
SPAIN
SWEDEN
SWITZERLAND
UNITED KINGDOM
UNITED STATES
JAPAN
Average Relative
Less One Sigma
Plus One Sigma
Source: Nomura Securities Co., Ltd
For Educational Use Only
Please see disclosure slide for more information.
20
Fundamental Index™ International
1983-2006 Cumulative Performance
Total Performance Of RAFI International vs
FTSE All World ex USA Index vs FTSE All World ex USA Value Index
25
20
15
10
5
0
Dec-85
Dec-87
Dec-89
RAFI International
For Educational Use Only
Dec-91
Dec-93
Dec-95
Dec-97
FTSE All World ex US
Please see disclosure slide for more information.
Dec-99
Dec-01
Dec-03
Dec-05
FTSE All World ex US Value
21
Fundamental Index™ Japan
1983-2006 Cumulative Performance
6.0
5.0
4.0
3.0
2.0
1.0
0.0
Jan-84
Jan-86
Jan-88
Jan-90
Jan-92
RAFI Japan
For Educational Use Only
Jan-94
Jan-96
Jan-98
FTSE Japan
Please see disclosure slide for more information.
Jan-00
Jan-02
Jan-04
Jan-06
FTSE Japan Value
22
How Well Does the
Fundamental Indexing™ Concept Work in
the “Less Price Efficient” Space?
Please see disclosure slide for more information
Fundamental Index™ “Next 2000”
1979-2006 Cumulative Performance
80
70
60
50
Adds twice as much value as R2V,
despite only one-fourth the value tilt.
40
30
20
10
0
Dec-81
Dec-84
Dec-87
RAFI 2000
For Educational Use Only
Dec-90
Dec-93
Russell 2000
Please see disclosure slide for more information.
Dec-96
Dec-99
Dec-02
Dec-05
Russell 2000 Value
24
Fundamental Index™ Emerging Markets
1987-2006 Cumulative Performance
7.0
6.0
5.0
Adds 1000 bp per annum, despite the
fact that value hasn’t worked in EM.
4.0
3.0
2.0
1.0
0.0
Dec-94
Dec-95
Dec-96
RAFI EM USD
For Educational Use Only
Dec-97
Dec-98
Dec-99
Dec-00
FTSE AW EMG
Please see disclosure slide for more information.
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
FTSE EM Value *
25
Fundamental Index™ Over-the-Counter
1973-2006 Cumulative Performance
RAFI™ NASDAQ Total Performance
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Dec-
Dec-
Dec-
Dec-
Dec-
Dec-
Dec-
Dec-
Dec-
73
77
81
85
89
93
97
01
05
RAFI™ NASDAQ
For Educational Use Only
NASDAQ Composite
Please see disclosure slide for more information.
26
Is RAFI™ Just Warmed-Over Value?
Please see disclosure slide for more information
How is RAFI™ a Value Index?

Weightings:
•
•
•
•

RAFI™-Sales Weight = Cap Weight x Relative Sales/Price
RAFI™-Book Weight = Cap Weight x Relative Book/Price
RAFI™-CF Weight = Cap Weight x Relative CF/Price
RAFI™-Dividend Weight = Cap Weight x Relative Dividend/Price
BUT:
• Value Tilt is Dynamic
For Educational Use Only
Please see disclosure slide for more information.
28
A Static Process
With A Dynamic Result
50%
1.50
Value Period
40%
Growth Period
1.25
Value Tilt
30%
20%
More Value
More Value
1.00
More Value
10%
0.75
0%
Less Value
-10%
Value In Favor
-20%
Value In Favor
Less Value
Value In Favor
0.50
0.25
Value Tilt–Rolling regression coefficient of RAFI™ against
[Russell 1000 Value minus Russell 1000 Growth]/2
-30%
0.00
Dec-80 Dec-82 Dec-84 Dec-86 Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06
Value
Valuetilt
tiltisismost
mostpronounced
pronouncedwhen
whenvalue
valueisisbeating
beatinggrowth,
growth,
and
is
modest
when
growth
is
beating
value
and is modest when growth is beating value
For Educational Use Only
Please see disclosure slide for more information.
29
Fama-French Comparative Statistics
Long/Short Attribution, 1979-2006
INDEX
Annual
Return
Annual
Alpha
RAFI™ 1000
15.8%
0.3%
Russell 1000
13.5%
RAFI™ 1000
Adj
R2
Small
Value
Beta
Momentum
0.970 (0.10)
0.36
1.03
0.3%
0.997 (0.15)
0.01
1.01
15.8%
1.1%
0.975 (0.09)
0.34
1.02
(0.07)
Russell 1000
13.5%
0.4%
0.997 (0.15)
0.01
1.01
(0.01)
RAFI™ 2000
17.0%
0.3%
0.941
0.80
0.30
1.06
Russell 2000
13.4%
-2.3%
0.970
0.81
0.20
1.06
Just Value? In a way, yes. Though, a well-specified risk model should explain
index returns. So, what’s with the massive negative R2000 alpha?
For Educational Use Only
Please see disclosure slide for more information.
30
Fama-French Comparative Statistics
Long/Short Attribution, 1979-2006
INDEX
Annual
Return
Annual
Alpha
Adj
R2
Small
Value
Beta
RAFI™ 1000
15.8%
0.3%
0.970
(0.10)
0.36
1.03
RAFI™ 1000V
16.4%
0.1%
0.951
(0.12)
0.50
1.03
RAFI™ 1000G
13.5%
0.8%
0.949
(0.08)
(0.11)
1.04
Russell 1000
13.5%
0.4%
0.997
(0.15)
0.01
1.01
Russell 1000V
14.6%
-1.1%
0.963
(0.15)
0.44
1.02
Russell 1000G
11.9%
1.5%
0.979
(0.18)
(0.40)
1.00
Just Value? Not so fast. What’s with the big R1000V negative alpha?
And how useful is replication of alpha with a long/short factor model?
For Educational Use Only
Please see disclosure slide for more information.
31
RAFI™ US Value Added
Long-Only Brinson Attribution
RAFI™ US Enhanced (1966–2006)
Total VA
Sector Allocation
Static VA
Dynamic VA
Value Tilt
Static VA
Dynamic VA
Size Tilt
Static VA
Dynamic VA
Stock Selection
RAFI™ US (1966–2006)
2.87%
0.62%
0.01%
0.61%
1.04%
0.51%
0.53%
0.41%
0.11%
0.30%
0.80%
Total VA
Sector Allocation
Static VA
Dynamic VA
Value Tilt
Static VA
Dynamic VA
Size Tilt
Static VA
Dynamic VA
Stock Selection
2.26%
0.53%
-0.05%
0.58%
1.10%
0.57%
0.53%
0.35%
0.14%
0.21%
0.28%
Numbers are reported as arithmetic averages for Brinson attributions.
For Educational Use Only
Please see disclosure slide for more information.
32
RAFI™ International Value Added
Long-Only Brinson Attribution
RAFI™ Enhanced International (1984–2006)
Total VA
4.38%
Country allocation
1.10%
Static VA
Dynamic VA
Sector Allocation
0.61%
Static VA
Dynamic VA
Value Tilt
1.63%
Static VA
Dynamic VA
Size Tilt
0.46%
Static VA
Dynamic VA
Currency Allocation
-0.16%
Static VA
Dynamic VA
Stock Selection
0.73%
0.20%
0.90%
0.14%
0.47%
0.88%
0.75%
0.22%
0.24%
-0.11%
-0.05%
RAFI™ International (1984–2006)
Total VA
3.70%
Country Allocation
1.13%
Static VA
Dynamic VA
Sector Allocation
0.35%
Static VA
Dynamic VA
Value Tilt
1.78%
Static VA
Dynamic VA
Size Tilt
0.49%
Static VA
Dynamic VA
Currency Allocation
-0.28%
Static VA
Dynamic VA
Stock Selection
0.23%
0.31%
0.81%
-0.02%
0.37%
1.03%
0.75%
0.26%
0.23%
-0.12%
-0.05%
Numbers are reported as arithmetic averages for Brinson attributions
For Educational Use Only
Please see disclosure slide for more information.
33
Is This Just Another Value Index?
Yes and No
RAFI 1000, Russell 1000 Value, Russell 1000 Growth, and S&P 500
1979-2004
50
45
RAFI Russell Russell
S&P
1000
Value Growth
500
Mean:
16.1% 14.7% 12.3%
14.0%
St Dev: 14.6% 14.3% 18.0%
15.4%
Beta:
0.90
0.87
1.12
1.00
Corr:
0.96
0.94
0.96
1.00
40
Growth of $1, from 1979
35
30
25
20
15
10
5
0
Dec-78
Dec-80
Dec-82
Dec-84
RAFI Comp 1000
Dec-86
Dec-88
Dec-90
Russell 1000 Value
Dec-92
Dec-94
Dec-96
Russell 1000 Growth
© 2006 Research Affiliates, LLC. Patent Pending; Publ. No. US-2005-0171884-A1. All rights reserved.
Duplication or dissemination prohibited without prior written permission.
For Educational Use Only
Please see disclosure slide for more information.
Dec-98
Dec-00
Dec-02
Dec-04
S&P 500
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Are We Blinded by Theory?
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Theory does a Marvelous Job explaining how the
world ought to work
Theories are sometimes provable, based on
certain assumptions
Gaps between theory and reality are normal
Still, some observers cling to theory as fact
• Assume a theory is correct description of reality
• Tacitly assume that, therefore, the assumptions are correct
• This is exactly backwards!
For Educational Use Only
Please see disclosure slide for more information.
35
Enough of the Past …
How about the Future?
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Paul Samuelson:
“Only the smallest fraction of economic writings, theoretical and
applied, has been concerned with the derivation of operationally
meaningful theorems. In part at least, this has been the result of
the bad preconception that economic laws deduced from a priori
assumptions possessed rigor and validity independently of any
empirical human behavior. But only very few economists have
gone so far as this. The majority would have been glad to
enunciate meaningful theorems if any had occurred to them.”
1. Theory is not fact. It describes an ideal world.
2. Empiricism which contradicts theory may be right.
3. Theory is improved by acknowledging its flaws and finding
improvement, not by rejecting contradictory evidence.
For Educational Use Only
Please see disclosure slide for more information.
36
Common Criticisms of the
Fundamental Index™ or RAFI™
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It’s just data-mining
It’s just clever packaging of active management
It’s just repackaged and warmed-over value*
• Alternatively, it’s just small-cap value
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What if growth starts to win?
• What if large-cap starts to win?
No one can know which stocks are overvalued
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Trading Costs are too high
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Fees are too high
More personal critiques of Arnott and RALLC:
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How dare we try to patent – and profit from – this idea?!
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Arnott and RALLC lay claim to the prior body of behavioral
finance, as if it didn’t exist.*
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For Educational Use Only
Please see disclosure slide for more information.
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