Tim Armour, the Chief Executive at Capital Group, always has a lot to say, and not everyone agrees with him. You may remember him as the market manager that disagreed with Warren Buffett’s comments on passively managed funds, and is a huge proponent of his firm’s actively managed American Funds.
The most compelling argument that Armour makes in defense of active fund managers, is their ability to outperform the market during down trends. It is a well known fact, and shortcoming of index funds, that passively managed funds have no recourse during market corrections and other downturns. When the market falls, so do all of the funds tied to the indexes, this is an indisputable truth. Armour counters, that the best active fund managers know how to get returns for their investors in all types of markets, and this fact makes actively funds management worth the additional risk and cost, but only if you have chosen one of the market’s top managers.
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If he’s not shy about publicly disagreeing with the esteemed Warren Buffett, one can’t help but wonder what his thoughts are on the new Trump economy. In a recent article in the Financial Times, Mr. Armour addresses this fascinating topic. Tim believes that the changes under this new administration will be significant and real; and will happen quickly. He believes that Trump’s policy may end the sluggish growth, a phenomenon that has already started to happen in the oil and drilling sector. He also warns of greater turbulence to come, especially in the sectors that are currently languishing, such as real estate and utilities.
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