So, there is a paper written in early 2014 that may not even have been published
yes--it says "forthcoming"--and a statement that "The GFAP has performed extremely well in the last 30 years on both a risk adjusted and nominal basis." However, it doesn't appear that he advocates
it, but... I'm not even sure I follow this... sets this up as a straw man for indexing and passive investing so that he can knock it down?
A reliance on a “pure” indexing approach like the GFAP is not necessarily a bad idea for some people, but it has obvious flaws as well. Asset allocation requires a certain degree of active forecasting and “asset picking” based on how we think the future performance of specific asset classes will translate to our risk profile and financial goals.
So, he is criticizing Jack Bogle based on his analysis of an indexing strategy never advocated by Bogle, that has "performed extremely well" over the last 30 years, but I guess not as well as active forecasting and asset picking which are "required?"
What I think I am hearing is: "I can prove I know more than Bogle because I know of a hot-off-the-press academic portfolio that backtests better than Bogle's broad recommendations. Having proved that I know more than Bogle, you should believe me when I say that not only do I know a better index, but I can do better yet
with active forecasting and asset picking."
So where do
emerging markets come in? 40 years ago or 26 years ago? Is Bogle wrong for not advocating a heavy allocation to emerging markets 26 years ago, in 1988 was Mr. Roche's firm advising its clients to adopt the GFAP and make a heavy commitment to emerging markets--if emerging markets really did
start to become "substantial components of the Global Financial Asset Portfolio" back then--which I continue to doubt?
I was going to guess that a reporter had mis-heard "14 years" and reported it as "40 years" but in fact the sentence "If we look at the last 40 years since emerging markets started to become substantial components of the Global Financial Asset Portfolio it becomes clear that Bogle is wrong and not by a small margin" is a direct quotation from what Roche wrote and published in his own blog
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.