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Home>It Is Possible to Outperform the Broad Market Indices Over the Long Term

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It Is Possible to Outperform the Broad Market Indices Over the Long Term


The following are the major points made in this article:

-A more and more recurrent theme in fund investing has been that broad index funds will be the best choice for investors.

-Most managed funds tend to perform no better than the entire stock market but with higher fees.

-Fund returns for the entire stock market as well as for non-core categories likely will vary significantly from each other over periods lasting 5, 10, or more years.

-Knowledge of these discrepant returns, as well as careful specific fund selection, can point to investments that will outperform the core market averages by significant enough amounts over given periods to make non-core and non-index fund choices highly worthwhile.

-Data is presented that shows that even nearly 15 years ago, a list of more than a dozen stock funds and a handful of bond funds, could be identified that would increase an investor’s annualized return on each 10K investment by about $5K.

Many investors may immediately recoil at the headings for this article. And why not? Actively seeking out the best funds to invest in, meaning not just picking the most popular index or managed funds, and then actively managing your portfolio takes time, some degree of knowledge, and may fly in the face of what many experts will tell you. The best approach to achieve the best performance, these experts say, is to latch on to perhaps a small number of good funds/ETFs, often non-managed index funds, and then don’t monkey with them.

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