We all love animal analogies and their use in the securities trading world is no exception. The main things that come to mind with elephants is that they are big, intelligent and can grow very old. In the trading business world, institutional investors are called elephants because of their size and intelligence in making decisions as stewards of other people’s money. An institutional investor is usually a group of people that together make trading decisions in such a large number that their organization qualifies for preferential treatment.
Capital Group is an elephant. Led by Timothy D. Armour as its chairman and principal executive officer, the Capital Group Companies manage over $1.4 trillion in assets, employ over 7,000 people, and has a history that goes back over 80 years. Thirty-three years ago, Timothy Armour joined Capital Group’s Associates Program after earning a bachelor’s degree in economics from Middlebury College. He has championed in-house research on the long-term benefits of active fund management. When criticism of Capital’s secrecy grew, Tim was instrumental in the decision to lift some of the secrecy around its operations and share more information with the media.
Timothy Armour became chairman of Capital Group after the death of its chairman, Jim Rothenberg, on July 2015. At the time, Tim Armour was chair of Capital’s management committee and a key deputy to Mr. Rothenberg. In October 2015, Janet Chang, CFA, wrote for Morningstar about American Funds, a subsidiary of Capital Group, after its recent Stewardship Grade “A” award. Janet analyzed Capital Group’s firm’s corporate culture, praising its new chairman, Timothy Armour, and the other committee members, for their continuation of the firm’s patient and long-term approach, which over its 80-year history has been the distinguishing characteristic of the firm’s investment philosophy.
On a September 2015 market commentary, Timothy Armour considered the US investment market volatility a healthy and expected correction that removed pockets of excess. After a six-year bull run in the U.S., some companies and sector valuations were stretched. Today we face increasing challenges in the U.S. economy and significant changes are expected with a new presidential administration. In that same interview, Tim Armour also called for short-term interest rates to gradually start moving higher so that “capital flows to areas where there are adequate returns” continues to be good advice.