Research Affiliates founder: The wave of giant IPOs may drag on the U.S. stock market for years

Glonghui June 5th｜Rob Arnott, founder of Research Affiliates, stated that mega IPOs such as SpaceX, Anthropic PBC, and OpenAI may drag down the broader stock market for years by diverting tens of billions of dollars away from existing stocks. After S&P Dow Jones Indices decided not to include these large new stocks in the indices quickly, this diversion effect may take some time to appear. However, in Arnott's view, as these companies’ weight in the indices gradually increases, the impact would take longer to transmit to other parts of the market anyway. Arnott is a pioneer in smart beta investing, and his company's strategies have been adopted by institutions such as exchanges. Arnott said, “This will disrupt capital markets, and it is already disrupting capital markets.” He is known for his research on fundamental indexation, a method that determines index constituent weights based on indicators such as profits and cash flow.