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Timothy Armour’s Take on Passive Investments

Timothy D. Armour is the Chief Executive Officer and chairman of Capital Group Companies board of directors. He also chairs the Capital Group Companies Management Committee and is the principal executive of Capital research and Management Company. Mr. Tim Armour has recently written an article discussing how Warren Buffet has made a $1 million bet for a charity’s benefit.Armour discusses how Mr. Buffet has wagered to attain greater returns than a selection of hedge fund managers by investing in the S&P 500 passive index fund. Warren Buffet seeks to prove how much more expensive and mediocre hedge funds are. Timothy Armour agrees with Mr. Buffet that a person can gain much more through investing in low cost simple investments and holding them for the long term.

Contrary to Buffet, Timothy feels that these passive index investments have a lot of risk and are highly volatile. He also thinks that the opportunity costs of such investments have largely unknown or have been greatly underestimated.Mr. Armour agrees that there are definitely a few successful exceptions who have invested in such funds. But he strongly discourages anyone who feels that passive index funds are a good investment plan for their retirement. He stipulates that this is largely due to the fact that such funds leave their investors with 100% exposure to volatility and losses during market downturns. Timothy advises that investors should instead seek to find experienced fund managers who invest their own money alongside their clients’.

About Timothy Armour,

He is an equity portfolio manager with over 32 years of experience. All his experienced has been attained with Capital Group. He started his career in 1982 as an investment analyst after receiving his Bachelor’s degree in economics at Middlebury college. Currently based in Los Angeles, Timothy was named the chairman of Capital Group in 2015 after James Rothenburg passed away. As Chief Executive, he manages a significant amount of money for the group, including the American Capital Income Builder fund valued at over $100 billion.