Has Warren Buffet ever been wrong about an investment strategy? It has been proven that today, there are mutual funds that only provide mediocre returns simply due to fees that are too high in addition to excessive trading.
What Buffet believes is that there are too many funds that are expensive, but also mediocre at best. And, these types of funds ultimately cheat the investor.
According to Tim Armour, chairman and chief executive officer of Capital Group, in an article published on CNBC, Buffet could attain better investment returns by simply looking into an S&P 500 passive index fund. You see, Buffet has put $1 million towards charity.
Timothy Armour explained his support of Buffet’s “from the bottom up” investment approach. That approach has been proving profitable now for years. Why? Because of these durable portfolios and the strong analyzing of the companies.
So what should consumers be wary of? Well, the debate of “active versus passive” is one that certainly does not serve investors. What this essentially means is that investments that are passive index investments are full of volatile risks and opportunity costs. The solution? It’s simple. By offering long term investment returns, at low cost, investors can get clients their much needed “safe” path to a rewarding retirement. The bottom line is that index funds expose investors to loss if the market goes down. One upside is that no matter how far down the market gets, it always comes back up. Buffet says there are exceptions to actively managed funds that do worse than the market.
Armour’s Capital Group is also the home of American Funds. It is considered to be one of the largest investment managers in the world. He became a Board Chairman in 2015 and works with other senior firm members to communicate set Capital business strategies, while also overseeing the company operations.Armour has extensive experience in investing, where he served previously as an Equity Investment Analyst with Capital which had him covering global telecommunications and U.S. service companies.