We retrieved Steve Blumenthal‘s notes from Inside ETFs this week and share three top takeaways from the conference.
Rob Arnott, founder and chairman of Research Affiliates, portfolio manager on the PIMCO All Asset and All Asset All Authority family of funds.
Rob Arnott’s presentation:
10-year forward expected annualized return for 60/40 is 4%
- For equities: Beginning dividend yield of 1.80%+ real long-term EPS Growth of 1.3% + implied inflation of 2% = 5.1% expected return for equities
- For bonds: 2.3% (10-year Treasury at the beginning of 2015)
- 60% of expected equity plus 40% of expected bonds EQUALS just 4% expected for the traditional 60/40 allocation mix
- The 40 year average for 60/40 is 7.1%
Rob added, “I think we should tell our clients this arithmetic”
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