Why Mutual Funds are better than Index Funds

[DesertCat]

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First, I don't think you have read all the posts. Second I have provided examples of mutual funds that have soundly beat their respective index over a reasonable period of time. Third, Berkshire Hathaway despite its anchor has continued to cream the market, especially when the market turns ugly.

I agree that a smart investor will develop their own portfolio to beat the indexes, mutual funds and Berkshire Hathaway. But if you have invested in the major indexes like the S&P 500 (not the specialty ones discussed in a different post) thinking they are better than the two alternatives, you are an incompetent investor.

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I have read all the posts, amd you have provided only ONE example of a fund that's beaten an index. Whether that fund is well run or just lucky, it's probably not going to beat the indexes in the future over long periods of time.

I described for you in general the handicaps mutual funds have. There are many, many very skilled, very good investors running mutual funds. And 95% of them will trail index funds over long periods of time. It's mainly because of the poor structure aand high costs of mutual funds. In fact, most mutual funds beat the indexes, BEFORE FEES. It's mainly the high fees that cause actively managed funds to trail index funds.

And to repeat. Berkshire Hathaway is NOT a mutual fund. It has no annual fees. It can invest where-ever Buffett wants in what-ever he chooses. That's exactly why it has outperformed. If it was a mutual fund, he would be hard pressed to beat indexes as well.

And lastly, the vast majority of people are "incompetent investors". That's okay, most people spend their time becoming good at something else, usually their careers. They simply don't have the time, education, and patience to invest successfully in the stock market. That's why Warren Buffett recommends they buy index funds.

You seem to think you understand investing well, but you don't understand the basic handicaps your managed fund manager will be suffering from. I think that makes you a good candidate for an index fund.