One of the best known investors, entrepreneurs, and philanthropists in the world is Warren Buffett. As the head of Berkshire Hathaway, Buffett has amassed a net worth in excess of $50 billion, which makes him one of the wealthiest people in the world. One of the founding principles behind Buffet’s investment strategy is to invest in a conservative and affordable manner. In many cases, this means avoiding mutual and hedge funds that come with higher expenses.
To make his point clear, Buffet made a $1 million bet saying that he could outperform various mutual funds by simply putting his investment into an index fund. Over the past few years, many people have been surprised by the results that show that Buffet’s more conservative and affordable investments have yielded better results.
While Buffet clearly won the investment challenge, many investment professionals are advising investors to be cautious of this strategy. Timothy Armour, who is the CEO of the Capital Group, has stated that Buffet’s results may have been due to the increase in the overall stock market and that it may not result in the same outcome in all stock market conditions.
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Armour continued to state that over the past 30 years, the Capital Group has had an average annual return more than 1.5% higher than what the S&P 500 would have yielded on an annual basis. The main reason for this is that a mutual fund and hedge fund manager has the ability to foresee issues in the marketplace and can invest accordingly.
Timothy Armour has been the head of the Capital Group for over 30 years. In that time period he has had many different roles, but has focused on the portfolio management and investment management side of the business for the majority of his tenure.
Find more about Capital Group: https://en.wikipedia.org/wiki/Capital_Group_Companies