Shadow of a Stout

The Chairman with a New Strategy


Recently, Warren Buffett, one of the most successful businessmen of our generation, made a wager with a group of hedge fund managers that he could achieve higher returns by investing in an S & P 500 passive index fund. The wager, for $1 million that will be donated to charity, looks to be Buffett’s for the taking, as by the time the bet expires at the end of the year, he’ll have achieved his goal. While there is no denying Buffett’s level of expertise, considering the amount of wealth he’s personally amassed in his career, according to Timothy Armour, Chairman and Chief Executive Officer of Capital Group, he’s incorrect in recently championing this business strategy and more information click here.

Buffett has publicly stated his support of the idea that the majority of the funds available are expensive and with too little return, an idea that Timothy Armour supports, but where their philosophies tend to diverge is when it comes to active vs passive index funds. Traditionally this is a debate usually held between investors within the industry, but Armour believes that this isn’t nearly as important as this concept: sufficient returns can best be gained by utilizing long-term investments that are low-cost. According to a recent survey in which 1200 investors participated, nearly half of them were unaware that in down markets, index funds expose them to 100 percent of the volatility experienced with riskier investments. While it common for the average index fund to do better over the long-haul, the exceptions are at times exponentially more lucrative. While a person investing in the very first S & P 500 index fund would have seen significant profits over the last 40 years, for someone investing that same amount in the top five active funds, the yields would have been significantly better and learn more about Timothy.

Timothy Armour has over 30 years of experience within the investment industry, all of which he’s worked for Capital Group in some capacity. After graduating from Middlebury College, Armour entered The Associates Program in 1983. In 2015, after acting as Chairman of Capital Group’s management committee and Capital Research and Management Company, Armour was elected as Chairman of Capital Group and Timothy’s lacrosse camp.

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