WEALTHTRACK Value Investor Rob Arnott Is Adding Growth to His Fundamental Index Mix
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Jan 23, 2026 
Rob Arnott, founder of Research Affiliates and creator of Fundamental Indexes, explains adding growth to a value-oriented indexing approach. He discusses why Apple and NVIDIA qualify for the new mix while Amazon and Microsoft do not. Conversations cover market froth, bubbles, reallocating toward small caps and internationals, and a new RAFI Growth method that weights firms by their contribution to aggregate growth.
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U.S. Market Is Frothy — Tilt Away
- Rob Arnott says the U.S. market is frothy and partly in bubble territory, driven by excess liquidity and deficit spending.
- He advises reducing exposure to expensive U.S. large caps and favoring small caps, value, and non-U.S. stocks.
Practical Definition Of A Bubble
- Arnott defines a bubble as requiring implausible growth expectations to justify current prices.
- If marginal buyers ignore valuations and prices need absurd growth to be justified, he calls that a bubble.
Palantir Example Of Implausible Pricing
- Arnott gives Palantir as an example: roughly $3–4 billion revenue priced at about $400 billion market cap.
- He argues that justifying that price needs a 50-fold growth, which he calls implausible.