Masters in Business Focusing on Growth (Not Market Cap)
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May 7, 2026 
Rob Arnott, founder of Research Affiliates and creator of RAFI indexes, explains a new way to weight stocks by growth using sales, profits and R&D metrics. He contrasts dollar-magnitude weighting with percent-based froth, reveals which big tech names fail the cut, and discusses volatility, turnover and real-world implementability. The conversation emphasizes measurable signals over narratives.
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Index Growth By Economic Contribution
- Indexing growth is two-dimensional, separate from valuation and value versus growth labels.
- Rob Arnott proposes selecting companies by growth rates and weighting by their dollar contribution to aggregate economic growth, not by price.
Growth Measured By Sales Profits And R&D
- RAFI Growth measures growth using sales, profits, and R&D growth and averages available rates to score companies.
- Companies in the top 25% of those growth measures are eligible for inclusion in the index.
Microsoft And Amazon Excluded From RAFI Growth
- Two of the Magnificent Seven fail to make RAFI Growth's cut despite recent prominence.
- Rob Arnott names Microsoft and Amazon as exclusions because their growth wasn't fast enough to qualify.