Sometimes back, Warren Buffet, one of the richest man on earth said that he could make more returns from investing in a passive index fund compared to what hedge fund managers can make. Buffet believes in simple investments that are low cost and held over a long period. Tim Armour says that he concurs with Buffet’s bottom-up investment approach that involves analyzing a company before establishing a portfolio that will go for a long period. Tim Armour also agrees with Buffet’s approach that Americans should save more for their retirement and learn the art of investment.
In a recent article, Tim Armour concurred with many things that Warren Buffet believes in. The two share the same notion that mutual funds are no longer the safest investment that an American can make. According to these two gentlemen, this is as a result of the high management fees associated with this trade and also as a result of excessive trading. The two also agree that the opportunity costs and volatility risks associated with passive index investments cannot be accounted for. Tim Armour and Warren Buffet hold the same notion that passive investment should be about long term investments returns coupled with low costs.
These two gentlemen also agree that passive index investments should be questioned as the safest path for Americans facing retirement. Despite being profitable in the long run, passive index investments are very risky in case of a down market. This industry has seen trillions pumped in the last few years. However, only less than 40 percent of the investors know about the volatility that comes along with the industry and how they would mitigate their losses in case of a market downturn. According to Warren Buffet analysis, an investment made in the S&P worth $10,000 four decades ago would be worth $500,000. Tim Armour then says that an individual who made the same investment with active funds would also have made the same amount during this time. Some of America’s top active funds include the likes of American Mutual Fund, the Growth Fund of America, the Investment Company of America, Washington Mutual Investors Fund and AMCAP.
Tim Armour is well known in the United States as a Portfolio Manager with 34 years of experience in the field. Currently, this great man acts as the chief executive officer and chairman of a company called the Capital Group. Tim Armour also holds other positions with some subsidiaries of this company such as Capital Research and Management Company where he is the principal executive and chairman.
Tim Armour has been shaped by a fine education and a great mind. For his undergraduate degree, Tim Armour attended the Middlebury College in Los Angeles where he majored in Business and Economics. He has held other lesser positions with the Capital Group such as a graduate trainee and equity investment analyst. Tim Armour is well known for his notion that an investor should not settle for average returns but should strive to achieve maximum returns.