Tim Armour: Warren Buffett Doesn’t Have it All Figured Out

Billionaire investor Warren Buffett has issued a challenge to is fellow investors: the person who can make the most returns from an investment will get $1 million to the charity of their choice. In keeping with his style, Buffett plans to stick to the S&P 500 passive index. That’s something fellow investor Tim Armour took issue with in a recent op-ed.While Armour doesn’t dispute Buffett’s success with passive funds, he claims it’s not a helpful model for the retirees that turn to him for advice. For Armour, passive index funds are in no way more safe tan active funds, they’re just more prosperous in this unusually long bull market.

This, Tim Armour argues, makes for a false sense of security that isn’t helpful when a bear market is upon investors and returns are small.Armour concedes that there is no way to guarantee an investment will pan out, but he argues that focusing on two elements can lead to stronger returns: management fees and the best manager investment. At his firm, Armour picks funds based on the amount in fees the investor is expected to pay, the lower the better. the second criteria depends on how much the manager of that fund is financially invested. Armour has found that a manager that is invested in their own fund generate confidence and in turn helps the fund grow.By sticking to these principles, Armour’s firm have averaged 1.47% higher than index benchmarks after fund expenses were paid for.

About Tim Armour:

Timothy D. Armour is an American investor from Los Angeles. After graduating from Middlebury College with a Bachelor’s Degree in Economics, he joined the Associates Program at Capital Group Companies.Armour has spent more than three decades working in finance and investment with Capital Group. The experience acquired with Capital Group made him an ideal fit for Chairman and Principal Executive Officer of Capital Research and Management Company. Armour also serves as Chairman of Capital Group Companies Management Committee.