Timothy Armour, CEO and Chairman of Capital Group, one of the largest wealth managers in the world, differs with Warren Buffet in one crucial area: investing your retirement funds.Buffet placed a wager of one million dollars, saying that if he invested one million in an S&P passive index fund, his investment would yield higher returns than if he placed the money into the hands of hedge fund managers. Should he win, Buffet will give the million to charity. Armour feels that in all likelihood Buffet will win the bet, since most of the time the investments placed in hedge funds incur significant costs. Armour also agrees with Buffet that Baby Boomers and younger generations must be prudent as to where they put their retirement funds, to make sure that they have financial security in their golden years.
Where Armour disagrees with Buffet is where best to put these retirement funds. As far as he’s concerned, it’s not a matter of passive or active funds, and it’s high time that we question the notion that passive funds are the best place to put one’s retirement money.While some actively managed funds have not done well, others have done very well indeed. Forty years ago someone would have invested $10,000 in the S&P index fund would have made more than half a million dollars today.
But another person who put their money into five of the best performing American Funds would have even better returns.Armour, who has a degree in Economics from Middlebury College, was named Chairman of Capital Group on July 28, 2015. He has been in the wealth management industry for 34 years.In a commentary for the Wall Street Journal, Armour encouraged investors to look for active managers who diligently research and look for companies of real value, and not just look at a stock’s market value on any given day. Watch video about Investing money : Click here.