FTSE RAFI Developed 1000 Index

bathblue

I'm interested in peoples' views on the Russell Developed 1000 Index.  To my eyes, it is a much more value oriented global large-cap value index, that removes some of the higher risk large cap holdings (i.e. Nvidia is 0.14%[3.67%] Tesla is 0.08%[1.12%]).

The downside is that it doesn't have so much of the growth stocks that have driven the world indices in the last few years.

UBS FTSE RAFI Developed 1000 Index Fund tracks this index.

Linton

Very interesting, thanks for raising it..  I would not suggest it should be held as a single or dominant component of a portfolio. However if one wants to "tilt" one's portfolio allocations to meet particular objectives/strategy then it looks much better than the alternative of iShares MSCI Value Factor.  This latter index seems to focus too much on US tech has-beens, eg Cisco, IBM, AT&T rather than companies that are in the  "value" category because of the nature of their business.

I am now investigating it as a replacement for the MSCI Multi-Factor index..

Hoenir

bathblue said:

The downside is that it doesn't have so much of the growth stocks that have driven the world indices in the last few years.

As excellent as these companies maybe, Buying them at multiples of 30, 40 or even 50 times current years earnings leaves little room for value. Buying ungeared cash generative companies as low as 10 times earning multiples is likely to be far more profitable in the longer term. Detailed analysis has shown that value investing (in the US) will underperform the S&P500 benchmark around every one year in three on average. However with a long term investing outlook will return on average 5% - 6% higher per annum ( with all income reinvested) .