Warren Buffett, the world-renowned investment giant, recently went on record to disclose a current wager that he made with a group of hedge fund managers. In the wager, which is for the amount of $1 million, Mr. Buffett stated that by investing in an S&P 500 passive index fund, he would be able to achieve better returns than the hedge fund managers. As the date for the bet nears its conclusion, Mr. Buffett stands to deliver. It is difficult to go against the proven methods of Warren Buffett, considering the fact that his stringent method for analyzing prospective funds has been time-tested, a few industry insiders, including Timothy Armour, see flaws in Mr. Buffett’s latest method. As the Chairman and Chief Executive Officer of Capital Group, Timothy Armour agrees with Mr. Buffett’s perspective on the market concerning current hedge funds, being that they are expensive with the inability to recoup significant gains. According to Mr. Buffett, the best way to recoup consistent gains for the long-haul is by starting with simple investments with low costs.
Where the opinions of the two investment powerhouses tend to differ, is on the intra-industry debate concerning active versus passive index funds. While history shows that more often than not, passive index funds seem to perform at a higher level than actively managed funds, Mr. Armour believes that by championing actively managed funds, investments are sure to prove more lucrative for all parties. He backs up this notion by mentioning the success of the top five active funds and the higher yields they have brought in comparison similar investments made in the first active S&P 500 index fund 40 years ago.
Timothy Armour graduated from Middlebury College in 1983, after which he immediately joined The Associates Program as a part of Capital Group.
Visit his LinkedIn Profile: https://www.linkedin.com/pub/dir/Tim/Armour