Buffett’s Investment Advice Challenged

In a February 27, 2017 article published on cnbc.com, Timothy Armour, Chairman and Chief Executive Officer of Capital Group, has challenged Warren Buffett’s claim that low-fee passive index funds will outperform actively-managed funds in the long run.

Warren Buffett has warned investors to avoid – active fund managers and to stick with low-cost index funds.

In 2007, Buffett bet $ 1,000,000 that a Vanguard S&P 500 index fund would beat five funds of hedge funds selected by Protégé Partners over the following 10 years.

It seems like Buffett will win the wager, as the S&P index fund has yielded a total return of over 85% through 2016, while the collective performance of the five funds of hedge funds has gained only 22% in that same period. The bet (the winnings will be donated to charity) goes through the end of 2017.

In his article, Armour agrees with Buffett that the best strategy is low cost, simple investments bought and held for the long haul. But he argues that passive index returns may not be the safe path for investors, as those funds are vulnerable to volatility and losses during down markets.

Armour advises that investors should look for funds with low expenses and high manager ownership, as those funds have consistently outperformed benchmark indexes. He points out that, in his firm’s 86-year history, its funds have averaged 1.47% higher returns annually than indexed funds.

Timothy D. Armour was named chairman of Capital Group in July, 2015, and he still manages money for the group, including the American Capital Income Builder fund.

Mr. Armour has nearly 34 years of investment experience, all with Capital Group. During his career he has covered global telecommunications and U.S. service companies. He holds a bachelor’s degree in economics from Middlebury College.

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Richard Blair and Wealth Solutions Educating Investors

Richard Blair is a financial advisor and operates a company, Wealth Solutions in Texas. His credentials seem impeccable. He is listed as: Registered Investment Advisor, Certified Annuity Specialist, Certified Estate and Trust Specialist, Certified Fund Specialist®, Certified Income Specialist™, Certified Tax Specialist™, and a Retirement Income Certified Professional®.

Blair recently contributed an article to Hackronym concerning the dangers of leasing a private home to others by using the services of Airbnb. He stated in the article that damages done by the renters are often not covered by the insurance of Airbnb and revert to the homeowner’s insurance policy and may not be covered depending on the policy. Blair adds that there are other risks involved. The homeowner may be liable for any injuries suffered in accidents by the renters while staying in your home. The homeowner may also be the subject of a lawsuit filed by the renters or by the neighbors who may have had property damaged by the renters. Renters could also leave the country before settling their rental agreement with the homeowner.

These possibilities, no matter how remote, require that anyone considering renting their private home should contact Richard Blair for an educated and trustworthy assessment and for contractual help if they decide to rent out the home.

Blair’s company, Wealth Solutions, is a registered investment advisory firm. Wealth Solutions is located in Austin, Texas. Blair and his company are dedicated to enhancing and protecting the investments and the lives of the people he and his company serve. Blair’s family is rooted in education; his wife, mother, and grandmother are or were teachers. He, himself, has a thirst for knowledge and as a young man, he began his avid interest in finances. In 1993, as soon as he graduated from college, he entered the financial world. The following year he founded his company, Wealth Solutions. Blair continues to rely on his interest in education, and he uses teaching as a model when he is dealing with his numerous clients. In the financial world, the terminology is often complex and nearly impossible to understand for someone without an MBA, but Blair provides the necessary financial education in understanding this world and completely answers the questions from those who are seeking solutions to matters concerning investing, retirement and estate planning.

For more information about Wealth Solutions and Richard Blair visit his website: Wealth Solutions – My Story

Additional sources: Hackronym