The U.S. is on the cusp of switching from a decade of plenty to an long and painful period of austerity.
That's the view from Jim Masturzo, chief investment officer at Research Affiliates, a firm that oversees strategies for over $130 billion in mutual funds and ETFs for the likes of Pimco and Charles Schwab. Founded by capital markets legend Rob Arnott, RA created the first funds deploying "fundamental indexing," an approach that weights equities by such features as sales, book value and dividends reflecting their importance in the economy. Hence, the RAFI fundamental funds avoid the pitfalls of cap weighted vehicles that chase the most expensive stocks and over-concentrate their holdings in the priciest names. For this writer, RA provides superb, academically-based insights into both where the economy is headed, and how investors should best position themselves to profit from the looming trends.
