Investment giant, Warren Buffett, recently made a wager with a group of hedge fund managers for the amount of $1 million. In the wager, Mr. Warren Buffett makes the claim that by investing in a simple S&P 500 passive index fund, he could achieve better returns than the group of hedge fund managers. As the closing date of the wager draws nearer, it looks as if Mr. Buffett will make good on his wager. While the astute business acumen of Warren Buffett is hard to challenge considering his stellar portfolio, there are those out there that disagree with this particular strategy of Buffett’s, most notably Timothy Armour, Chairman and Chief Executive Officer of Capital Group. In Mr. Buffett’s estimation, the market is currently flooded with mediocre funds that are expensive, offering less than acceptable results. Warren Buffett has championed the detailed analysis of prospective companies in order to build a respectable portfolio and over time this method has proven to be solid. The conversation regarding active versus passive index funds is one that has been brewing within the inner circles of the investment world for quite some time, but Timothy Armour seems to believe this leads to an unnecessary perspective in terms of solving the problem. While he agrees with Mr. Buffett that attaining low-cost mutual funds that will do well over the long-term, he also believes the mythology surrounding passive index funds can be a little misleading, particularly during market downturns. In a recent survey that analyzed 1200 investors, it was discovered that nearly half of those surveyed were unaware that during market downturns, those investing in passive index funds were subject to 100 percent volatility. Timothy Armour adheres to the school of thought that by implementing two particular factors in investment, acquiring mutual funds with low expenses and high manager ownership, high returns can safely be secured in the long haul and Tim on Facebook.
Today, Timothy Armour is the Chairman and Chief Executive Officer of Capital Group. His Linkedin and He graduated from Middlebury College in 1983, having garnered a Bachelor’s Degree in Economics. He has over 34 years of experience in the investment world, all of which have been with Capital Group and learn more about Timothy.
Other Reference: https://en.wikipedia.org/wiki/Capital_Group_Companies