Want to Outperform 88% of Professional Fund Managers? Use This Simple Investment Strategy.
Becoming a professional fund manager isn't easy, but it turns out that beating the returns of some of the best fund managers in the world is. It's a quirk of stock market mechanics that makes a simple investment strategy far better than the average actively managed mutual fund. While it might be possible for many professional funds to outperform over the short run, it gets harder and harder as time goes on.
There's a big drag on active funds' investment returns: fees. As a result, just 12% of active mutual funds outperformed the S&P 500 index over the past 15 years, according to S&P Global's SPIVA scorecard. Identifying those 12% ahead of time is practically impossible, so the best strategy to outperform professional fund managers is to buy a simple S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO).
It's not going to turn heads when you mention it at your next dinner party, but it does offer one of the highest expected returns of any single investment you can buy. And it'll do far better than an actively managed mutual fund picked by random chance.
Source Fool.com
