Via Rob Arnott of RAFI:
Just like stocks, bonds, sectors, countries, or any other financial instrument, equity factors and the strategies based on them can become cheap or expensive. We measure relative valuations of the strategy vs the market benchmark to estimate how cheap or expensive a strategy is. We find that when relative valuation is low compared to its own history, that strategy is positioned to outperform. When valuation is high it is likely to disappoint. Select a strategy to see our expected return model for that portfolio here.
Click to use the interactive tool.
Source: Research Affiliates
