/MIB: Chris Brightman, Research Affiliates’ CIO

MIB: Chris Brightman, Research Affiliates’ CIO

This week, we speak with Chris Brightman, chief investment officer and partner at Research Affiliates (RAFI). He was a member of the Investment Fund for Foundations (TIFF), the Virginia Retirement System, the University of Virginia Investment Management Company, and Strategic Investment Group. Previously, Brightman ran money for the University of Virginia endowment.

As he explains. “Smart Beta” uses principles underlying factor investing, and allows for simple, transparent and inexpensive index strategies that are not market-cap weighted. He quotes Jack Bogle in stating most investors are better off with a simple portfolio of broad indices; however, when we look at what investors actually do, they engage in bad behavior that leads to a 200 basis point annual under-performance versus the broad .

However, he believes that Fundamental Index is a simple elegant way to pursue a contrarian rebalancing contrarian trading approach that is more akin to cap-weighted indices than expensive active stock selection. The challenge is to keep emotions out of the process of ownership and rebalancing.

We discuss the current under-performance of value stocks, and how cyclical they tend to be. Every long term study around the world has confirmed that Value outperforms Growth historically. Where does Value’s outperformance comes? Brightman believes it is a little bit of the assumption of additional risk, as well as a behavioral element.

His favorite books are here; A transcript of our conversation will be available here.

You can stream/download the full conversation, including the podcast extras on Apple iTunesBloomberg, Spotify, Google Podcasts, Overcast, and Stitcher. All of our earlier podcasts on your favorite hosts can be found here.

 

 

 

Chris Brightman’s favorite books

The Attention Merchants: The Epic Scramble to Get Inside Our Heads by Tim Wu
Chris Brightman

The Myth of Capitalism: Monopolies and the Death of Competition by Jonathan Tepper
CIO

Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change by Edmund Phelps
SPOTIFY

Islands in the Net by Bruce Sterling
University of Virginia

The Hacker Crackdown by Bruce Sterling
university of virginia investment management

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