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Godfather of Factor Investing Embraces ‘Maverick Risk’

Godfather of Factor Investing Embraces ‘Maverick Risk’

(Bloomberg) --


In the midst of a multi-front trade war, Wall Street has advised that investors shun emerging market stocks. Rob Arnott, the founder of Research Affiliates and “godfather” of smart beta investing, disagrees. Half of his personal portfolio now sits in developing-nation value stocks, and his firm’s models predict U.S. equities will only return half of a percentage point in real terms over the next decade. Still, a high conviction bet of that sort might not be for everyone, especially those who are sensitive to “Maverick Risk,” Arnott says.

Also joining the show is Bloomberg’s Chris Nagi, a Bloomberg markets executive editor, who discusses what Federal Reserve Chair Jerome Powell’s “appropriate” comments mean for stocks. As always, the show’s hosts and guests close out the episode with the traditional discussion of “The Craziest Thing I Ever Saw in Markets (This Week.)”

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To contact the editor responsible for this story: Topher Forhecz at tforhecz@bloomberg.net

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