Rob Arnott Portfolio
0.41%June 04 | MyPlanIQ portfolio symbol P_79041

Rob Arnott Portfolio Overview

1. Background Information on Rob Arnott and the Portfolio Philosophy

Rob Arnott is a renowned investor, researcher, and founder of Research Affiliates, a global leader in smart beta and asset allocation strategies. He is widely recognized for his pioneering work in fundamental indexing and alternative weighting strategies. Arnott's investment philosophy emphasizes diversification, risk management, and a focus on long-term value creation. His portfolios often incorporate a mix of equities, bonds, and alternative assets to achieve a balance between growth and stability.

The "Rob Arnott Portfolio" reflects his belief in global diversification and risk mitigation. It combines traditional asset classes like equities and bonds with alternative investments such as commodities and inflation-protected securities. This approach aims to reduce volatility while providing exposure to a broad range of markets and economic conditions.

2. Asset Allocation and Holdings Analysis

The portfolio is well-diversified across asset classes and geographies:

• Equities (30%): VEU (10%) provides exposure to international developed and emerging markets, while VV (10%) covers U.S. large-cap stocks. VNQ (10%) adds real estate exposure, enhancing diversification.
• Fixed Income (50%): BNDX (20%) offers international bond exposure, LQD (20%) focuses on U.S. investment-grade corporate bonds, and TLT (10%) provides long-term U.S. Treasury exposure for stability.
• Inflation Protection and Commodities (20%): TIP (10%) safeguards against inflation, and DBC (10%) provides exposure to commodities, which can act as a hedge during inflationary periods.

Diversification: The portfolio is highly diversified across asset classes, geographies, and sectors, reducing reliance on any single market or economic factor.

Risk Level: The inclusion of bonds and alternative assets lowers overall portfolio risk compared to an all-equity portfolio. However, the allocation to commodities and international bonds introduces some volatility and currency risk.

Pros:

• Broad diversification reduces risk and enhances stability.
• Inflation protection through TIP and DBC.
• Global exposure provides growth opportunities across markets.

Cons:

• Lower equity allocation may limit growth potential during bull markets.
• Commodities and international bonds can be volatile and subject to currency fluctuations.
• Higher bond allocation may underperform in rising interest rate environments.

3. Application for Retirement 401(k) and IRA Investors

This portfolio is well-suited for retirement investors seeking a balanced, diversified approach with moderate risk. For 401(k) and IRA accounts, investors can replicate the portfolio by selecting funds that closely match the ETFs:

• VEU: Look for international or global equity funds in your 401(k) plan.
• VV: Choose a U.S. large-cap equity fund or S&P 500 index fund.
• VNQ: Select a real estate or REIT fund.
• BNDX: Opt for an international bond fund or global fixed-income fund.
• LQD: Use a corporate bond fund or investment-grade bond fund.
• TLT: Choose a long-term Treasury bond fund.
• TIP: Look for an inflation-protected bond fund.
• DBC: Select a commodities fund or natural resources fund if available.

If exact matches are unavailable, investors can use similar funds or consult their plan administrator for guidance. For IRA accounts, investors can directly purchase the ETFs listed in the portfolio.