For years it has been Warren Buffett’s contention that most people are best served by putting their money in index funds that passively follow the S&P 500. This is a low-cost way to have a diverse portfolio. While Tim Armour, the Chairman and CEO of Capital Group, agrees with Buffett that keeping fees low and a portfolio diversified are important, he contends that people shouldn’t invest in passive funds but rather actively managed funds.
Contrary to popular wisdom, Tim Armour says that there are active funds that have low fees and outperform the market. The trick, he has said, is to find one where the manager has parked their own money in it. This gives the manager the incentive to really do their homework and “earn their keep”. He also warns that the main, overlooked problem with investing in passive funds is that they are 100% exposed to bear markets with no manager there to mitigate the loss and what Tim knows.
Tim Armour, a resident of Los Angeles, has spent his professional career at Capital Group. He started out as a participant in the company’s The Associates Program and then became an equity portfolio manager. His skill at investing eventually led to his being the top executive at Capital Group.
With 35 years of investing experience under his belt, Tim Armour has actively managed funds through both good and bad times in the stock market. He is a graduate of Middlebury College, having earned his Bachelor’s Degree in Economics from this institution.