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Rob Arnott: Sell U.S. Tech Stocks, Buy Emerging Markets: (PAUAX)

FYI: Investors may be thrilled that U.S. stocks have rallied, pushing the S&P 500 to a 4.4% total return for the year, including dividends, as of the close on Wednesday. But the good times probably won’t last, according to Rob Arnott, founder of the investment research firm Research Affiliates and co-manager of funds such as Pimco All Asset All Authority (ticker: PAUAX).
Ted barrons_daily_newsletter

M* Snapshot PAUAX:


  • I chuckled reading this. The fund description is "a disciplined and contrarian approach" supported by "robust research". If you had held this fund for the last five years, your return would have been zero, all the while paying Mr. Arnott and PIMCO a 2.74% management fee every year. Another case of alternative strategies not panning out, but milking investors with high fees.
  • Arnott's funds are FoFs and seem to be a place for PIMCO to get more AUM for its various funds.

    Arnott had a 20% short S&P position in PAUIX (one of his big popular alt funds) and held it for *years* during the 'bull' market post-'09. Why? His 'model' said to hold it in the fund. Yes, you could have held the sister fund that didn't have the short position but that was very telling that he was so beholden to his quant models that he could't change with the times.

    I held PAUIX for a while in the mid-00s but sold out of it early during the GFC recovery. TL;DR I am not a huge Arnott fan.
  • On the same page with @rforno here as regards Arnott. I once owned PAAIX, the sister fund to PAUIX minus the forever-S&P short, but neither of them were in any meaningful way "tactical," as the category implies. Both have been long EM assets of every stripe year after year, which worked in the mid-oughts, but have been a drag most of the time since. Keep a tab on EMs (equity, debt, currencies), and you'll have a good idea how All Asset is doing.

    Apparently he's been pretty much missing from the interview circuit for a while now, after being touted on the circuit as an investment genius, a title his track record and "tactics" clearly don't justify.
  • So essentially similar strategy to GMO which so far has NOT worked. We shall see.
  • I have in the past invested in both of these two funds (PASAX & PAUAX) and had dead money for a good number of years in them. Mr. Arnott has favored emerging markets ever since I can remember that they were an asset class of choice. And, when they waned he still favored and continue to favor them. I found these funds were not the dynamic funds that I thought they were. A fund that I like that has been dynamic in the markets and kicks off a good income stream to boot has been PMAIX.
  • edited November 2018
    ET91 said:

    So essentially similar strategy to GMO which so far has NOT worked. We shall see.

    Are you referring to the 7y GMO forecasts? That's not the way they invest in all their products.
  • Is there "any" alternative strategy fund that actually earns its expenses?
  • Hi AndyJ, That is correct. I am referring to GMO 7y forecasts.
  • ET91 said:

    Hi AndyJ, That is correct. I am referring to GMO 7y forecasts.

    @ET91, thanks for the clarification.

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