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Forecasting is Hard…and a Fool’s Errand After Taxes
by John West, 6/10/24

Of course, perfect or even near-perfect market forecasting is folly. But even if we can find a successful forecaster, odds are that they won’t add any value after taxes.

How Can “Smart Beta” Go Horribly Wrong?
by Rob Arnott, Noah Beck, Vitali Kalesnik, John West of Research Affiliates, 11/2/23

In smart beta, we find that factor returns—net of changes in valuation levels—are much lower than recent performance suggests. In fact, many of the most popular new factors (some 458 at last count) have succeeded solely because they have become more expensive.

Is Diversification Dead?
by Rob Arnott, John West of Research Affiliates, 1/27/21

Over the last dozen years, investors holding the classic US 60/40 portfolio were substantially better off than their diversified peers, yet now is not the time to abandon diversification and diversifying asset classes. We believe it is imprudent to trust that escalation in valuations will continue unabated into the next decade...

Is ESG a Factor?
by John West, Ari Polychronopoulos of Research Affiliates, 7/24/20

Applying the definition of factor robustness that was established by our Research Affiliates colleagues in a 2016 award-winning paper, we determine ESG is not a factor. Nevertheless, the importance of ESG as an investing strategy is undeniable. We explore how greater clarity around defining ESG can quicken the pace of ESG integration in equity portfolios.

A Quick Survey of "Broken" Asset Classes
by John West, Amie Ko of Research Affiliates, 6/25/20

Pundits, prognosticators, and even investment boards often make misleading declarations that an asset class is broken, that its prospects for earning investors a reasonable future return are very dim. These proclamations can lead to investors’ abandoning these assets to chase recent winners.

Plausible Performance: Have Smart Beta Return Claims Jumped the Shark?
by John West, Alex Pickard of Research Affiliates, 12/3/19

To get the attention of smart beta investors in a crowded marketplace, some smart beta providers are laying claim to performance that appears implausible. So what is plausible? We look at historical live performance to answer this important question.

The Advisor’s Case for Smart Beta Direct Indexing
by John West, Amie Ko of Research Affiliates, 9/13/19

Smart beta direct indexing is an increasingly accessible implementation route that accommodates tax-loss harvesting and customizations based on client preferences and circumstances.

The Biggest Failure in Investment Management: How Smart Beta Can Make It Better or Worse
by John West, Jason Hsu of Research Affiliates, 10/24/18

The biggest failure in investment management—the gap between the returns realized by the investor and the returns earned by the strategy or fund the investor owns—typically remains in the shadows with the glare of the spotlights focused on alpha. Smart beta is no exception. We propose two ways to reframe the client performance review that we believe will result in better long-term outcomes.

Rebalance or Rush Hour?
by Brent Leadbetter John West Amie Ko of Research Affiliates, 8/3/18

Embracing a disciplined approach to rebalancing can lead to better long-term investment outcomes. Overcoming the natural tendency to wait-and-see before repositioning our portfolios can be a difficult, but worthy, goal for investors to pursue. Advisors can help investors surmount this and other behavioral hurdles by adopting a systematic rebalancing approach that effectively institutionalizes contrarian investment behavior.

Ignoring Starting Yields—Nabbing This “Usual Suspect” in Poor Investment Outcomes
by John West Amie Ko of Research Affiliates, 9/27/17

Starting conditions matter. Today’s investment yields impact future realized returns. But many still rely on past returns to estimate future returns. Our online Asset Allocation Interactive tool gives you the information you need to look ahead, not just back.

Live from Newport Beach. It's Smart Beta!
by Feifei Li, John West of Research Affiliates, 8/24/17

Our headquarters in Newport Beach is only 50 miles from the Hollywood studios, although the drive can take up to two hours in rush-hour traffic. But far more than traffic separates the studios’ world from ours.

Are You Underweight FANMAG? Chillax!
by John West, Amie Ko of Research Affiliates, 6/30/17

The first half of 2017 is shaping up to be unequivocally brutal for value-oriented rebalancing strategies. Wired to avoid pain, we humans know it’s very tempting to ask whether a model or philosophy is broken, especially the moment it dashes expectations.

How Not to Get Fired with Smart Beta Investing
by John West, Vitali Kalesnik, Mark Clements of Research Affiliates, 1/20/17

It may not be my money, but it is my job. — Charles Ellis in Investment Policy: How to Win the Loser's Game

Take the 5% Challenge! (or The “Lloyd Christmas” Lesson)
by John West Jim Masturzo of Research Affiliates, 10/26/16

Now’s the time to get real. Now’s the time, in a world of paltry bond yields and meager dividends, to make an honest assessment of your portfolio’s long-term expected return.

How Can "Smart Beta" Go Horribly Wrong?
by Rob Arnott, Noah Beck, Vitali Kalesnik, John West of Research Affiliates, 2/19/16
If investors don’t wise up soon that rising valuations are responsible for most of the “alpha” produced by smart beta, the inevitable mean reversion to historical valuation norms threatens to unleash a smart beta crash.

The Confounding Bias for Investment Complexity
by Jason Hsu, John West of Research Affiliates, 1/21/16
Complexity can dampen investor understanding, leading to poor investment decision making and ultimately derailing long-term financial goals—yet the bias toward investment complexity persists, reinforced by explanations that are behavioral in nature.

The Danger in "Debalancing"
by John West, Brandon Kunz, Amie Ko of Research Affiliates, 7/31/15
Eat a balanced diet. Drilled into our brains since preschool, this advice falls squarely in the “duh, everybody knows that” camp. But it’s not just kids who need reminding. Parents and grandparents, as role models and dietary enforcers, do too. Common sense alone tells us this universally applicable dictum is the right way to eat. Different foods have different nutritional and caloric values. If we eat a wide variety of food groups, or as a five-year-old child is taught, “Eat a rainbow,” good nutrition is likely to take care of itself.

There's Diversity in Value
by Brent Leadbetter and John West of Research Affiliates, 2/4/15
A portfolio comprising long positions in individual fundamentally weighted country indices and short positions in cap-weighted country indices might prove to be the Boris Diaw of a diversified portfolio. Investors would be unlikely to meet their return targets by concentrating all their assets in such a strategy. However, given its high Sharpe ratio and low correlation with widely used asset classes, it seems a suitable addition to a robust asset mix.

Hiring Good Managers Is Hard? Ha! Try Keeping Them
by John West, Amie Ko of Research Affiliates, 11/20/14
Because the likelihood of hiring equity managers who will outperform the market is remote, it is sensible for investors to monitor their actively managed funds. But placing underperforming managers "on watch" might not be the best policy.

Slugging It Out in the Equity Arena
by John West and Ryan Larson of Research Affiliates, 4/25/14
Selling recent losers and buying recent winners is the antithesis of the systematic rebalancing discipline through which smart beta strategies earn long-term excess returns. Indeed, we contend that this procyclical behavior is what pays, over time, for the value added by fundamentally weighted index investing and other smart beta strategies.

The Deserted Island Portfolio
by John West of Research Affiliates, 10/25/13
What would a Deserted Island investment portfolio look like, managed without the distractions of cable news and short-term benchmark comparisons?

Attention 3-D Shoppers
by John West of Research Affiliates, 7/26/13
Why do retail shoppers love a sale while capital markets flee from falling prices? Investors should consider starting to fill their shopping carts while inflation hedges are cheap....

The Lure of Hedge Funds
by John West of Research Affiliates, 4/18/13
Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies.

Wait for Your Pitch in Today's Market
by John West of Research Affiliates, 3/1/13
Great hitting in baseball depends in part on waiting for the right pitch. In today's market, most asset classescoming off their impressive 2012 recordare "high and outside" the valuations necessary for future big league returns. Patience is the name of the game today.

The Newlyweds Dilemma
by John West of Research Affiliates, 4/26/12
Before marriage, men and women enjoy a lot more free time. Married life represents a huge shift in their habits and schedules. Similarly, a new world of lower expected returns signals a major break from mainstream investment approaches. This months Fundamentals examines how investors can position their portfolios for the future.

A Slippery Year for Excess Returns
by John West of Research Affiliates, 2/1/12
Last year, securities prices moved like a school of sardines. That environment made life difficult for both active managers and the Fundamental Index approach. This month's Fundamentals examines what happened in 2011 and the opportunities for breaking loose this year.

De-stressing Balanced Fund Investing
by John West of Research Affiliates, 12/16/11
Balanced fund management has largely become a benchmark-hugging exercise, with asset allocations confined within a tight band. This month's Fundamentals examines what can be done to improve the added value investors can obtain from balanced fund investments.

Sector Weights: On Average Wrong, but Dynamically Right
by John West of Research Affiliates, 5/25/11
The markets have been through an extraordinarily volatile period the past five years, beginning with strong equity returns in 2006?2007, followed by the Global Financial Crisis (GFC) in 2008, and the subsequent Mother of All Recovery rallies in 2009?2010. Talk about a full market cycle! During this period, energy and financial stocks have experienced dichotomous lives. Energy stocks jumped 10% per year and led all sectors of the market. Meanwhile, the GFC pounded financial stocks. To be fair, some financial institutions caused the GFC. The other nine sectors all outperformed the broad market.

Hope is Not a Strategy
by John West of Research Affiliates, 10/26/10
Most pension funds and 401(k) calculators assume total returns in the 7-8 percent range. Is this assumption realistic, however, with a mature economy saddled with unprecedented debt levels and an aging workforce? This commentary examines retirement plan assumptions and calculates that we can reach this return level only if we assume top quartile results for stocks, bonds, and alternatives over the next 10 years. That's like expecting a decade of sunshine in the markets.

An Emerging Conundrum
by John West of Research Affiliates, 5/20/10
Emerging economies have nearly doubled relative to the developed world since the mid-1990s. Despite this growth, however, emerging financial markets have performed relatively poorly over the long term as measured by the traditional indices. This gap between emerging market economic and stock market performance is a direct result of the return drag from capitalization weighting. Often, one, two, or at most a handful of stocks dominate local emerging markets. Not once have these large capitalization stocks collectively outperformed the rest of the market over a five-year period.
30 results found.