Research Affiliates Founder: The wave of giant IPOs may pose a drag on the U.S. stock market for many years.

Research Affiliates founder Rob Arnott said that mega IPOs such as SpaceX, Anthropic PBC, and OpenAI could potentially cause a sustained drag on the broader stock market by diverting hundreds of billions of dollars from existing stocks. The impact of this diversion may take some time to manifest, especially after S&P Dow Jones Indices decided not to quickly include these large new stocks in their indices. However, Arnott believes that as the weight of these companies in the indices gradually increases, their influence may take even longer to permeate other parts of the market. Arnott, a pioneer in smart beta investing, has had his company's strategy adopted by institutions such as PIMCO and Invesco. He said, "This will disrupt the capital markets, and it's already disrupting the capital markets." Arnott is renowned for his research related to fundamental indexing, a method that determines index component weights based on factors such as earnings and cash flow.