In 2008, Warren Buffet wagered a bet against a group of hedge fund managers that an S&P 500 index fund would do better than a portfolio of hedge funds in ten years. In 2017 all indications are that the billionaire investor will win the wager.
Buffett noted that active investors incur much higher expenses than index funds in their quest to outperform the market.His time-tested approach is bottom-up investing.
While commending Mr Buffet, Tim Amour the chairman and CEO of Capital Group and a contributor on CNBC’s website stated in a recent article that high management fees and excessive trading render many mutual funds non-viable in the long run.
Timothy Armour also stated that index funds have no protection against downturn markets.
Finally, he pointed out that the average actively managed fund has done worse than the market over meaningful time horizons.
Tim Armour was elected chairman of Capital Group in July 2015 following the passing of former chairman Jim Rothenberg. He is Chairman and CEO of Capital Research Management, chairman of the Capital Group Companies Management Committee and also equity portfolio manager according to CNBC.
As an Economics graduate fresh out of college, Tim Armour joined Capital Group in 1983. He was accepted into the Capital Group’s Associates Program where he would go on to work as an equity investment analyst. 34 years later, he is at the helm of affairs.
“Find active managers who earn their keep.” this is the philosophy Amour advocates. He says that fund managers need to be continually researching companies they have invested in as well as those they plan to invest in. He insists that they rely on in-depth analyses rather than on index funds.
Capital Group and Samsung Asset Management forged a partnership in 2015. The two companies will work together to resolve statistical issues, develop retirement solutions
and create investment products in Korea.
In August 2015 major financial upset across the globe mainly the crash in China’s Shanghai Composite triggered a huge selloff, while many investors feared the worst. Amour stated it was only a correction of the markets after the US had seen a six-year bull run. It turned out he was right.
International markets are currently experiencing rapid economic growth. Tim has noted that with the election of Donald Trump, the markets showed signs of fatigue. He warns of uncertainties that come with market regime changes.