Is there such a thing as a better mouse trap? This week’s Financial Thought Leader guest has created an alternative to traditional index funds. Instead of being based on market capitalization or stock price, his Fundamental Index® approach measures fundamentals such as sales, profits, and dividends to determine the weight securities have in his indexes. Research Affiliates Chairman and CEO Rob Arnott explains why fundamentals can make a big difference.

Great interview on indexing, investment process and more with Rob Arnott. Check it out below!

Action point

Be Open To New Investment Ideas But Don’t Bet The Farm On Them

-Fundamental Indexation – Weights stocks based on key fundamentals, not price. -Fundamentals can include revenues, earnings, cash flow, book value, dividends, etc.

Fear Creates Bargains

Consider Emerging Markets Stocks and Bonds

Celestial Chase

What does Financial Thought Leader and portfolio manager Arnott do to unwind from his intensive schedule of research, investing and financial innovation? He describes his “geeky hobby.”

 

Rob Arnott