Volatility is the name of this market’s game. The Dow and S&P 500 both entered bear markets this week, although they both put up a brief fight with a robust rally on Wednesday. Yields on U.S. Treasury securities also bounced around.

These stomach-churning moves are hard to ignore unless you can take a longer view. This week’s guest is focusing on bigger investment themes and identifying cheap global sectors as the market sorts things out.

A year ago on WEALTHTRACK, in September of 2021, Research Affiliates’ Rob Arnott made two macro observations. One, he predicted there were “very high odds” of a resurgence in inflation. Two, that the multi-year outperformance of growth over value stocks was probably finally over. He dated the turn to August of 2020.

He proved prescient on the inflation call and so far seems to have gotten value’s comeback right.

Rob Arnott is Chairman of the Board and Founder of Research Affiliates, which is celebrating its 20th anniversary this year. Research Affiliates describes itself as a “research-intensive asset management firm that focuses on innovative products.”

Among the many funds that Arnott created and now co-manages is the PIMCO All Asset Fund, also celebrating its 20th anniversary this year.

In this interview, Arnott shares his outlook on inflation, value stocks, and his cheap diversifiers strategy.

WEALTHTRACK Episode #1914 broadcast on September 30, 2022

Listen to the audio-only version here:

Explore This Episode

We have compiled additional information and content related to this episode.

ROBERT “ROB” ARNOTT

Founder & Chairman, Research Affiliates
Co-Portfolio Manager, PIMCO All Asset Fund

ACTION POINT

DIVERSIFY INTO CHEAP SECTORS OF THE MARKET

CHEAP MARKETS’ POTENTIAL

Expected 10-Year Returns vs. Expected Volatility Risk

Asset Class	Expected 10-year Returns	Expected Volatility
Emerging Market Stocks	+10%	+20%
EAFE Stock (Europe, Australasia & Far East)	+10%	+15%
European Stocks	+10%	+15%
U.S. Small Cap Stocks	+9%	+2-%

ONE INVESTMENT

DIVERSIFIED INFLATION HEDGESL VALUE

OWN A BROAD BASKET OF INFLATION HEDGING ASSET CLASSES:

Emerging Market stocks & bonds
REITs: Real Estate Investment Trusts
Commodities

WEB EXTRA

FAST MOTORCYCLES

Research Affiliates Rob Arnott, a summa cum laude graduate in economics, applied mathematics, and computer science, has worked hard building research-intensive investment firms, publishing award-winning financial articles, and creating fundamental indexes, among other innovations. He is also a strong believer in having fun.