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You presume that the goal of most mutual funds is to beat the market.. it is not!




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Alright, I'll buy most of your post, as the argument is very strong for large funds (however, there are still hundreds of small funds that can invest in the same way that I can). However, why is the goal of an equity fund not to beat a stationary index (s and p 500) each year? Why would ANYONE invest in a fund that they know has a goal to lag behind a fund that is not managed? Are there that many people out there that are paranoid that the s and p 500 will not achieve up to historical standards (which it probably won't with as many people that are investing in these funds now, however, the rates will still be very good).