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Arnott, Draper Talk Fundamental Indexing

ETFtrends.com

Research Affiliates founder and CEO Rob Arnott and Invesco PowerShares Managing Director Dan Draper discuss the growth of fundamental indexing and increased adoption of those indexes by exchange traded funds with ETF Trends Publisher Tom Lydon at the ETF.com Inside ETFs conference in Hollywood, Fla.

“Putting good common sense alongside good analytics and an approach to asset allocation and diversification pays dividends,” said Draper.

The PowerShares FTSE RAFI US 1000 Portfolio (PRF) , one of the ETFs that started the smart beta revolution celebrates its tenth anniversary later this year. PRF, the flagship PowerShares ETF that benchmarks to a Research Affiliates index, has grown to $4.45 billion in assets under management while obtaining a five-star Morningstar rating. PRF tracks the FTSE RAFI US 1000 Index.

Fifteen PowerShares ETFs benchmark to Research Affiliates fundamentally-weighted indexes.

Arnott highlighted the advantages of applying fundamental indexing to emerging markets equities, noting that emerging markets stocks are his third-largest personal holding.

“Over half the stocks in the emerging markets trade at single-digit P/E’s,” said Arnott. “Give me a break. How much bad news is already priced in?”

The PowerShares FTSE RAFI Emerging Markets Portfolio (PXH) has outperformed the MSCI Emerging Markets Index year-to-date .

Watch the video below to see the full interview.

To view past video interviews, visit our video section.