Today’s Yahoo Finance article provides another reminder of the merits of index investing. I extract a subtle point from the article: large cap indexes are very tough to beat while smaller capitalization indexes are less very tough to beat. 🙂
By the numbers, 70% or more of active fund managers underperform their benchmark. But what about the 30% that do? I am unaware of any consistent approach to identify those 30% in advance. Also, the “group of 30%” changes from year to year.
I recommend the good ‘ol “Core and Explore” approach. Have at least 75% of your portfolio by the book with index funds. If you like to gamble, go ahead, but with no more than 25% of the pie.