Tim Armour, Chief Executive Officer at the Capital Group, recently had his commentary published on CNBC regarding Warren Buffets’s belief in passively managed funds. Buffet is a known critic of actively managed funds, and believes that many mutual fund managers add little value to their investors.
Armour counters that with the proper information considered in the selection process, top managers can be utilized to outperform the market. Mr. Buffett’s main concern with actively managed funds lies in their fee structure more so than the strategies employed by their managers. To this, Armour counters that it is not always clear what, exactly, are the fee structure in passively managed funds, and how much money is truly being earned by these funds.
While it is true that the market has had a large net gain in the past decades, Timothy Armour argues that there are managers that have realized greater returns than the indexes over the same time period. Mr. Armour notes that the top five actively managed American Funds (The Growth Fund of America, AMCAP, Washington Mutual Investors Fund, The Investment Company of America and the American Mutual Fund)have outperformed the market indexes. Yes, investors in these five funds would have accumulated greater wealth than their peers who invested in index funds, or the majority of other actively managed funds.
In mid-2015, Tim Armour was named to succeed the recently deceased James Rothenberg. Prior to this promotion, Tim was the chairman of the Capital Research and Management Company. With over 30 years of capital investment experience, and he has also worked as an equity investment analyst and portfolio manager. Based in Los Angeles, Tim is a graduate of Middlebury College, and his career at Capital Group began in the Associates Program. His success in the markets make him one to watch.