The paper demonstrates how selecting and weighting companies by sales, profits and innovation captures durable economic growth while reducing exposure to expensive, valuation-sensitive names.
Research Affiliates has recently released a report ‘ Outgrowing Glamour: A Fundamental Approach to Growth Investing ’ which argues that conventional growth investing has drifted far from its intended purpose. Across the long-term dataset, income-statement growth portfolios delivered stronger results than both the market and traditional growth indices The authors noted that most growth indices embedded market capitalisation into both selection and weighting, which caused them to &