$150B Built on One Idea: Why Cap-Weighted Indexing Is Broken | Rob Arnott, Research Affiliates

About this episode

Rob Arnott discusses the flaws in cap-weighted indexing and the advantages of fundamental indexing.

Rob Arnott chose Wall Street over astrophysics, built his career applying scientific method to markets, and coined the fundamental indexing revolution that now runs $150B+ in assets. He breaks down the hidden drag inside cap-weighted indices -- stocks get added after they soar and deleted after they crash -- and explains how RAFI's rebalancing alpha has beaten cap-weighted value in three out of four years over 20 years live. We dig into RAUS (fundamental selection, cap weighting, 99.9% correl...

People in this episode

Host: Brad Roth

Guest: Rob Arnott

Topics covered

• cap-weighted indexing
• fundamental indexing
• investment strategies
• market analysis
• rebalancing alpha

Keywords

• cap-weighted indices
• fundamental indexing
• investment
• market performance
• RAFI
• rebalancing

Mentioned in this episode

Organizations: Research Affiliates, Wall Street

Books & works: fundamental indexing

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