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ETF Prime: VettaFi's Focus on Fundamental Indexing

BY | ETF Database
5:33 am ET 09/23/26 | 5 VIEWS
VettaFi’s acquisition of RAFI Indices and the case for fundamental indexing were the focus on this week’s ETF Prime. Host Nate Geraci welcomed Tom Hendrickson, president of TMX VettaFi. He was followed by Rob Arnott, chairman of Syzygy Asset Management, formerly known as Research Affiliates.Key Takeaways: VettaFi’s indexing platform now tops $260 billion in assets following the RAFI acquisition. The RAFI US index has beaten the S&P 500 in roughly 7 of the last 10 years. FNDX returned 400% over 13 years, compared to 280% for the IWD. Hendrickson described the deal as a strategic accelerator rather than a typical acquisition, saying the fit came down to shared values around client-centrism and courage. The deal closed just over a month after its June announcement. He also pointed to Arnott’s pioneering work in fundamental indexing, which dates back to Research Affiliates’ 2002 founding. The deal, he said, brings VettaFi’s total indexing platform past $260 billion in assets. The company now runs over 2,000 indexes on its proprietary Index Factory technology. That includes 90 added through the RAFI acquisition, which alone represents more than $180 billion in tracked assets.See more: VettaFi Accelerates Smart Beta Expansion With Closed RAFI DealExpanding Beyond Thematic IndexingHendrickson explained that VettaFi pairs its index design capabilities with a media and data network spanning ETF Database, ETF Trends, and Advisor Perspectives. The firm uses that reach to track real-time investor sentiment. RAFI’s addition pushes VettaFi beyond its historical strength in thematic and sector indexing, he said. The firm can now speak to core equity and fixed income strategies as well. Looking ahead, Hendrickson said that VettaFi plans to expand its index co-creation efforts across Europe, EMEA, South America, and the APAC region over the next one to two years. He also views the growth of active ETFs as a sign of healthy investor choice. Disciplined, rules-based index strategies remain compelling, he said, even as launching new products has become easier. Rob Arnott, chairman of Syzygy Asset Management, also joined the discussion to explain the origins of fundamental indexing. He built the strategy after watching the median Russell 3000 stock rise 20% while the S&P 500 fell 27% following the dot-com crash. That gap convinced him that cap weighting was the core flaw in traditional indexing. The RAFI US index has beaten the S&P 500 in roughly 7 of the last 10 years, adding 2% to 2.5% in annual alpha. Over 13 years, the Schwab Fundamental U.S. Large Company ETF (FNDX A) returned 400%, compared to 280% for the iShares Russell 1000 Value ETF (IWD A-).Listen to the Entire Episode of ETF PrimeFor more ETF Prime podcast episodes, visit our ETF Prime Content Hub.

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