Nearly seven years have passed since the publication of our 2016 paper “How Can ‘Smart Beta’ Go Horribly Wrong?”

In the 1980s there was a famous TV ad for Wendy’s with the tagline “Where’s the beef?”.

Key Points

• In a prolonged anti-value momentum-driven rally, it’s easy and natural to forget the long-term value proposition of a rebalancing discipline.
• The evidence and intuition underlying a contrarian value investing discipline has proven merit in cycle after cycle across history.
• By steadily rebalancing against the market’s most extravagant bets, RAFI strategies are positioned to recoup accumulated shortfall at the cycle’s turn, delivering meaningful long-term value-add.
• The continued outperformance of today’s most dominant companies is unlikely to be sustainable in the long run.