Tim Armour, the CEO and Chairman of Capital Group, recently presented his case against Warren Buffett’s argument that most investors are better served by putting their money into a low-cost, passive index fund that follows the S&P 500. Mr. Armour says that active investing does have its place, although he agrees that many of the actively managed funds are mismanaged as well as having too high of fees.
However, he also explains that there are active funds that make a great investment choice. You can find active funds that feature low fees and don’t trade excessively, which indirectly drives up costs. He said the trick is to find a fund where the manager has parked a large part of their own money in it; this incentives them to do the best job possible.
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While Tim Armour is the top executive at Capital Group, he continues to work as an equity portfolio manager . He also often writes about financial markets and his take on how to invest. His commentary has appeared in places like CNBC.com. A subject that he often writes about is how no one has to settle for average returns. He has said that investors need to identify fund managers who “earn their keep” and can consistently beat the market with the funds they operate.
Tim Armour has also said that another thing to identify when picking a fund manager is those who do their due diligence and put in the work on finding promising investments. He has said that too many fund managers get lazy and that’s why they fail to beat the market.
Find more about Tim Armour at https://www.americanfunds.com/advisor/insights/market-commentary/tda-rwl-qavolatility.html