Timothy Armour is a strong proponent of active fund managers, a management strategy that he implemented at Capital Group after succeeding Jim Rothenberg as Chairman. He believes that investors can, and should, find active managers to manage their portfolios.
A good active manager should look for long-term value to help investors’ portfolios perform better than the market. Due to the bumpy economic recovery over the last few years, many companies are finding it harder to grow their profits and revenue. However, despite the slow economic growth, some companies still manage to outperform market expectations, and it is the task of active managers to find these exceptions.
A good example is Netflix Inc., an entertainment company presently worth over $45 billion. During the early 2000s, Netflix was a struggling publicly traded company competing for market share in the entertainment industry with then giant Blockbuster Inc., worth $5 billion. A good fund manager would have invested in Netflix because the company had great potential for growth, instead of settling for the safer Blockbuster Inc., which is bankrupt today.
Importance of Research
A good fund manager will spend their time researching companies using in-depth analysis to uncover insights and inform their views on potential prospects. They meet with all stakeholders within the industry to form financial analyses and comprehend the risk-reward trade-off before making investment decisions.
What sets apart a good active fund manager from the rest is their ability to persevere through a lot of work and outpace their benchmarks in the long term. Unfortunately, many people find researching thousands of funds to be hectic, and hence settle for index funds. Investors should find active managers worth their keep instead of settling for average investment returns.
Timothy D. Armour is the CEO and Chairman of Capital Group and its subsidiary, Capital Research and Management Company, Inc. He is also the head of the Capital Group Companies Management Committee and is an experienced equity portfolio manager. Thanks to his 32 years at Capital Group, Tim has the experience needed to lead the Group that manages a whopping $1.4 trillion in assets.
After graduating from Middlebury College with an economics degree, Tim participated in Capital Group’s Associates Program. Later, he was absorbed by the company and placed as an analyst handling equity investment covering global communications and US service companies. Tim, a long-time advocate of an active fund management, spearheaded the formation of an in-house research program at Capital Group.