Recently, business magnate and philanthropist, Warren Buffett went on record to disclose a wager made between him and a group of hedge fund managers. The wager, with $1 million at stake, states that by investing in a simple S&P 500 passive index fund, Mr. Warren Buffett would be able to achieve a higher yield than his counterparts over a predetermined amount of time. The proceeds for the bet will be given to the charity of the winner’s choosing. As the end-date for the bet draws closer and closer, its seems that Mr. Buffett will be successful. Due to Warren Buffett’s lofty status in the world of business investments, it is difficult to challenge his tried and true strategies, but that is just what Timothy Armour has done. Timothy Armour is the Chairman and Chief Executive Officer of Capital Group, and while he agrees with many of Warren Buffett’s views on investing, citing his level of success, where he disagrees with Mr. Buffett is the significance of the passive index fund. Throughout the industry, there has been an ongoing debate on whether investing in passive or active funds is the more lucrative of the two options. Traditionally, passive funds have performed better than their active counterparts, but according to a recent study in which 1200 investors were surveyed, it was discovered that of the 1200 investors, only half of them were aware of the fact that during market downturns, passive index funds expose investors to 100 percent volatility. Armour agrees with Mr. Buffett on the idea that starting with low-cost investments to be cultivated over the long-term is essential in creating significant financial returns, but he also champions the idea that subscribing to the prospects of active mutual funds can create better yields and learn more about Timothy.
Timothy Armour is currently the Chairman and Chief Executive Officer of Capital Group. He has over 30 years of experience in the investment arena, having joined The Associates Program in 1983 after graduating from Middlebury College. He is based in Los Angeles, CA and his Linkedin.
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