Outperforming the market is difficult and most actively managed funds are not able to do so. If the average lay person is not skilled at picking stocks then what evidence shows they can be skilled at picking a fund manager? A lay person would likely do best by using a market ETF. I am a few years late to this post.
One piece of evidence for this is the SPIVA US Scorecard for 2024 which showed that over the 15 years to December 2024 “there were no categories in which a majority of active managers outperformed” the market. Additionally, “65% of all active large-cap U.S. equity funds underperformed the S&P 500″. https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2024.pdf
A good anecdote is that Warren Buffet made a bet worth $1 million against hedge fund manager Ted Seides from Protégé Partners. Buffet bet that an S&P500 index fund (ETF) would outperform a group of hedge funds over a decade from 1 January 2008. Buffet won this bet. The index returned 7.1% compared to the hedge funds at 2.2%. https://finance.yahoo.com/news/warren-buffetts-1m-bet-why-000017682.html
Outperforming the market is difficult and most actively managed funds are not able to do so. If the average lay person is not skilled at picking stocks then what evidence shows they can be skilled at picking a fund manager? A lay person would likely do best by using a market ETF. I am a few years late to this post.
One piece of evidence for this is the SPIVA US Scorecard for 2024 which showed that over the 15 years to December 2024 “there were no categories in which a majority of active managers outperformed” the market. Additionally, “65% of all active large-cap U.S. equity funds underperformed the S&P 500″. https://www.spglobal.com/spdji/en/documents/spiva/spiva-us-year-end-2024.pdf
A good anecdote is that Warren Buffet made a bet worth $1 million against hedge fund manager Ted Seides from Protégé Partners. Buffet bet that an S&P500 index fund (ETF) would outperform a group of hedge funds over a decade from 1 January 2008. Buffet won this bet. The index returned 7.1% compared to the hedge funds at 2.2%. https://finance.yahoo.com/news/warren-buffetts-1m-bet-why-000017682.html