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Capital Group CEO Details His Investing Strategy Disagreement With Warren Buffett

Warren Buffett is well known for advising investors to simply put their money in a low-fee mutual fund that tracks the entire S&P 500. His contention is that you’ll beat all other strategies with this method as most money managers fail to beat the index and charge higher fees.

Tim Armour, the Chairman and CEO of Capital Group, agrees with Mr. Buffett in that most active mutual funds do charge far too much and deliver way too little. Armour also agrees that most investors would be well served to choose funds with lower fees and then hold for the long-term. However, Armour does not believe that all active funds should be avoided.

Tim Armour’s contention is that you can do very well with an active fund that has low fees, avoids excessive trading, and has a substantial amount of the fund managers own money invested in it. A good money manager that “earns his keep” can avoid one of the major pitfalls of passive investing which is that when the markets collapse so will the value of the passive funds.

Armour has spent his entire professional career at Capital Group. In addition to his executive duties he continues to also act as an equity portfolio manager. He is also responsible for the guidance of the company’s popular American Fund mutual fund group. Timothy Armour earned his Bachelor’s Degree in Economics from Middlebury College.

In an interview, Armour said that he believes the strong increase the stock markets have been experiencing since the election of Donald Trump are real. He believes this is due to three factors; rising interest rates, faster economic growth, and higher inflation. He went on to say that interest rates have been declining for almost all of his career and he believes they have now hit their lowest point and will inevitably start rising.

Learn more about Tim Armour: https://www.americanfunds.com/advisor/insights/market-commentary/tda-rwl-qavolatility.html

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