A Deeper Look Into The Risks Of Passive Index Investments

Recently, Warren Buffet has wagered a million dollars to charity that can bring in a greater investment return than a hedge fund management group by making investments towards an S&P 500 passive index fund. This is definitely an interesting claim that warrants attention. Tim Armour, the chief executive officer at Capital Group, has added his input to this situation. He believes that Warren Buffet is correct in believing that there are too many overpriced funds that short investors in the long run. He also believes that the risks of passive index investments are often very high due to their susceptibility to volatility risks and opportunity costs.

Jim has stated that index funds have their place, but they provide no cushion against down markets. In addition to all of this, he also believes that there are two helpful ways to help investors identify exceptional fund managers, low expenses, and high manager ownership. This means you should disregard all of the high-cost funds and work with fund managers who invest their own money along with investors. He also finds that it is worth noting that millions of people are retiring and younger Americans are doubtful that they will be able to save for their own retirement. It is important that seek out qualified investors to help them secure their future.

Capital Group, founded in 1931 in Los Angeles, California, is one of the world’s oldest investment management companies. It was founded by Johnathan Bell Lovelace. Originally, the company was named Lovelace, Dennis & Renfrew. It would later become known as the Capital Group. They currently manage over $1 trillion in assets. They offer various services including, mutual funds, collective investment trusts, investment services, and private equity. Today, Timothy D. Armour is the chairman and chief executive officer of Capital Group. He is also principal executive officer of Capital Research and Management Company. He has over 32 years of experience from working with the company. He also has a bachelor’s degree in economics that he obtained from Middlebury College.