VettaFi to Acquire RAFI Indices; Combined AUM to Top $260B

VettaFi has signed a definitive agreement to acquire RAFI Indices from Research Affiliates, combining RAFI’s two decades of fundamental-indexing research with VettaFi’s index technology and insights platforms. The transaction is expected to close in the coming weeks, subject to customary closing conditions and regulatory approvals, and will bring the combined asset base to more than $260 billion upon closing.

RAFI Indices constructs indexes that weight companies by economic measures such as sales, cash flow, book value and dividends rather than by market price. RAFI’s methodologies are used by several smart-beta exchange-traded funds, including the Schwab Fundamental U.S. Large Company Index ETF (FNDX), which manages about $25 billion, and the Invesco RAFI 1000 ETF (PRF), which holds roughly $10 billion.

Under the agreement, RAFI’s index intellectual property and research operations will join VettaFi’s technology and data teams. VettaFi indicated it will distribute RAFI’s methodologies through its platform and tools to asset managers and product providers. Financial terms were not disclosed.

Tom Hendrickson, president of VettaFi, called RAFI “the gold standard for fundamental indexing” and described the integration as enabling a broader set of data-driven investment solutions. Rob Arnott, founding partner and board chair of Research Affiliates, described the sale as a new chapter for RAFI and noted the strategy selects and weights securities based on measures of economic size rather than market value.

The companies said the combined business will provide expanded access to RAFI intellectual property and support the launch and management of products that use RAFI methodologies. Investors who hold funds linked to RAFI indexes will continue to be exposed to those strategies while the acquisition proceeds through the closing process.