Successful Mutual-Fund Managers Beat The Competition. Very Few Beat The Market.
"A study of thousands of mutual-fund managers has found that the key
to success isn’t beating the market — only a tiny minority can do that
over multiple years — but beating the competition. Managers who fall
behind performance benchmarks and other mutual funds tend to lose their
jobs, while managers who can stay ahead of the pack stay in business, even if they lose to the ultimate competitor, which is the market itself."
"The paper in the current issue of the Financial Analysts Journal adds
further evidence that most human beings, for all their wonderful
attributes, are below average when it comes to managing large amounts of
money. Managers who survived the competitive gauntlet for 10 years have
better records than those who were removed from funds after a year or
two, the study found, but they showed no ability to beat the market when
their performance is measured against the markets and investment styles
of their funds." Read more by Daniel Fisher in Forbes at http://www.forbes.com/sites/danielfisher/2014/08/07/winning-mutual-fund-managers-beat-the-competition-not-the-market/
Bottom line: Pass up actively managed funds and buy low cost index mutual funds or exchange-traded funds. (If you aren't familiar with Lake Wobegone and Garrison Keillor, "all the children are above average.")