Is Buffet Right About Passive Investing?

In a piece published on CNBC.com, Timothy Armour took Warren Buffet to task on the billionaire’s stance on investment funds. Buffet made a wager that he would donate $1 million to charity if the S&P 500 outperformed the average hedge fund, a wager that he apparently won. On one hand, Armour concedes that Buffet has a point inasmuch as there are indeed too many hedge funds that are patently bad investments. Armour argues hedge funds are no different than the products put out by any other industry in that customers need to look beyond the hype and marketing and focus on quality to learn more: https://www.thecapitalgroup.com/our-company/management-team.html click here.

On the other hand, Amour points out that the Buffet’s passive versus active argument is problematic as it fails to take into consideration market volatility that is completely unpredictable. Armour argues that while index funds are an important part of an investment strategy, they are no defense against a bear market. It his belief that although Buffet’s focus on fundamentals and long-term investment are tried and tested, passive investing is not some panacea that protects against market downturns.

Timothy Armour is the Chairman of Capital Group, an investment company offering private equity and mutual funds, with $1.39 trillion under management. Armour joined Capital Group after graduating from Middlebury College with a degree in Economics. He worked his way up at Capital, starting as an intern and eventually becoming an analyst specializing of investment in the telecom sector. He then became one of the company’s top portfolio managers. He was chosen as Jim Rothenberg’s successor, becoming Chairman in 2015.

In 2015, Armour commented on Capital Group’s partnership with Samsung Asset Management. Armour said that the partnership’s goal was to jointly create investment products for the Korean market. At the time of the announcement, Capital Group had more than $275 million under management from Korean customers.