Warren Buffet is very optimistic about passive index funds, and this led him to wager $1 million for charity believing to get high investment returns. He was positive that investing the money in S&P 500 passive index fund is better than investing in mutual funds. The results of his gamble are expected to be announced anytime in the year 2017 and according to how things are he might indeed collect the returns. Most investors think that investing in expensive funds would give them high returns, but Mr. Warren Buffet considers this as a high mediocre idea. He chooses passive index fund because it involves low maintenance cost and it is a simple way of investing in the long run. He only needed to scrutinize the companies in which he wishes to invest in before carrying on the actual investment.
Tim Armour is an experienced investment executive currently working at Capital Group as a chairman and CEO. He says that Mr. Buffet might be correct, but according to his perspective, passive index funds are not always the safest way to invest for retirement. He says that these index funds do not alert the subscribers of the consequences on returns in case of down markets. The investment might flow with trillion dollars but these returns are highly volatile, and losses can occur anytime. Apparently, very few investors know about this risk when initiating the investment until a market downturn occurs. Some of the things that the consumers get to know when searching for an investment method is on management fees involved, returns expected and other information that does not help the investor in details. The debate about the active and passive statuses of the investment remains an intra-industry argument. People such as Mr. Buffet will still argue that the passive index returns are the perfect way of investing depending on the time when an investor began his or her investment and learn more about Timothy.
About Timothy Armour
Timothy Armour is an investment executive serving Capital Group as the chairman and CEO and Capital Research and Management Company, Inc. as the principal executive officer. He also serves Capital Group Management Committee as the chairman. Timothy has been working with Capital Group for more than 30 years earning himself great investment experience. He had also worked with other companies in the United States as equity portfolio manager and equity investment analyst and more information click here.
Other Reference: https://www.crunchbase.com/person/tim-armour