Warren Buffett is famous for advocating that most people are better off in a passive fund that follows the S&P 500. He says every other method of investing for regular investors is too expensive and will have lesser returns. Recently, Tim Armour of Capital Group pointed out the flaws in what Buffett is saying.
Timothy Armour makes the argument that not all active funds charge high fees and trade too much. The key, he says, is to find a fund where the manager of it puts their own money. This is the best way to find a fund where the manager earns their keep and delivers superior returns. He also says that one huge problem with passive funds is that when the stock markets inevitably tank there’s nothing to protect it from going dramatically down in value just like the rest of the market. An active fund manager who is earning their keep will mitigate losses which can’t happen in a passive fund.
Read more about Timothy Armour on americanfunds.com
Timothy Armour has over 30 years of experience as an equity portfolio manager in the financial industry. He is now the Chief Executive Officer of Capital Group, which is one of the oldest investment firms in the world and is located in Los Angeles, California. After the former Capital Group Chairman of the Board, Jim Rothenberg, died, Timothy Armour was named Chairman of the Board of the company in July 2015. When accepting this new position, Armour said that he was mourning the loss of his colleague and friend and hoped to follow in his footsteps. Additionally, he recognized Rothenberg’s strong ability to meet the long-term interests of the company’s clients and employees. As the new Chairman, Timothy Armour said he would work to carry on this tradition and was proud to have been named.
Find more about Tim Armour: http://www.barrons.com/articles/winning-managers-weigh-in-1486794286