Warren Buffett recently made a statement that he stands by passive index investments and would bet a million dollars that he could outshine any hedge fund manager using this approach. Tim Armour agrees with Warren in some cases, however, passive index investments is not the way to go.
Tim agrees that mutual funds can provide mediocre returns for investors and high management fees. But at the same time, passive index investments are an unknown factor and can be typically underestimated. It’s not about passive or active investment banking but more about how to deliver long term investments that are good with a low cost.
There is no hidden secret knowledge that can tell you beforehand how the funds will perform. So how is it possible for investors to identify hedge fund managers that are exceptional. Based on research of thousands of mutual funds they have concluded that there are two types of filters- high manager ownership and low expenses. By tossing out the high cost funds and having fund managers invest their own money will result in positive results.
Tim Armour, chairman of Capital Group Companies, has over 32 years of experience. He began his career at Capital utilizing The Associates Program as a participant and gained a bachelors degree at Middlebury College in Economics. In 2015, Tim expressed his thoughts on the market in China and the U.S. economy.
He stated the the economy was not growing as people expected and it would be healthy for the economy to invest in short term interest rates versus long term. In his opinion, this would lead to a stronger economic and financial system.