Quote:
Originally Posted by Rain Man
I've come to the conclusion that a big part of this is the massive tech stocks that are so heavily weighted. The only way to beat the S&P for the past several years is to overweight yourself in the FAANGs,
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A lot of US large cap funds are closet index trackers. You make money as a percent of assets under mgmt. If some portfolio manager has his client in Rainman Large Cap US fund and it's down 14% heading into their 1Q financial review, he can just point to the S&P 500 down 13%. Tough year for markets, war, inflation, etc. To beat the market, you have to deviate from it which means sometimes multi-year periods where you underperform even though your strategy is good. People move their funds
Which leads to the second problem, if you're actually consistently good then money will pour in. To continue your strategy, you may need to limit incoming money by closing your fund to new investors or even money from existing investors. That kind of goes against making more money though which most people and businesses want. I think the first active mgmt. Vanguard Primecap fund doubled the S&P 500 by it's 30 year anniversary. Can't get into them as new investors though