Warren Buffet placed a $1 million bet that would support charitable initiatives, citing that he could reap more returns by venturing in an S&P 500 fund rather than in a hedge fund. Tim Armour noted that the market is full of funds that do not help the investors. He further upholds Warren’s dedication to long-term investments that are simple and affordable. His approach of first studying the markets has been a sure way over the years. Warren’s opinion triggered a debate, which Tim Armour was eager to explore.
Active versus Passive
Tim noted that some funds have high management fees and produce poor returns in the long run. In the same breath, there is little or no knowledge about the risks involved in passive index funds as shown in a recent survey. He, therefore, doesn’t encourage people to think of investments in a passive or active investments approach but to consider affordability and favorable long-term returns on investments. Over the years, managed funds have recorded poor performance as compared to passive index funds, but if approached wisely, both approaches are capable of yielding good returns. Tim concluded that the only clear ways to tell which method is efficient are by embracing investments that have a high manager ownership and are of low costs.
About Tim Armour
Tim Armour has been at Capital Group since the start of his career. He began as an Associates program assistant and later served in various capacities. Tim rose through the ranks to become Chairman in 2015.
Learn more about Timothy Armour: https://www.thecapitalgroup.com/us/about.html