Tim Armour, who is the chief executive officer of Capital Group, believes that Warren Buffet is wrong when it comes to his investment advice. Warren Buffet has confidence that investment firms are useless and has more confidence with his investment in an S&P 500 passive index fund.
It is true that there are over hyped mediocre investment funds, but most reputable companies are superior to a passive investment. It is also correct that expensive mutual funds no longer perform well due to the high management fees.
It should be considered that passive funds are very volatile since there is a lack of active short term management. This sort of investing can be seen more like long term gambling. Whether it is active or passive, a fund needs to be able to have a long term profit.
Mr. Warren Buffett still relies on outdated information to knock actively managed funds. He says that 40-year long-term passive funds would have made way more than active funds, but the market has completely changed since 40 years ago.
In order for investors to make a great return according to Tim Armour, they must learn how to look for a good manager. They need to look for funds that have a high manager ownership to assure the integrity of the managed fund. They must also seek out low management fees since many funds have become out of control.
Timothy D. Armour is an investment professional that has the decade of experience in investing. All of his experience has been with executive positions within Capital Group. He currently resides in Los Angeles.
Find more about Tim Armour at https://www.americanfunds.com/advisor/insights/market-commentary/tda-rwl-qavolatility.html