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This ETF Has Consistently Outperformed 88% of Mutual Funds Over the Past Decade

The Motley Fool

Finding an ETF or mutual fund that can consistently beat the market year in and year out is practically impossible. Wall Street is full of sharp minds that are often willing to share their investment insights and strategies with everyday investors through a mutual fund. That's not for lack of options.

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A Financial Mystery: Investors Paying Tens of Billions of Dollars to Underperforming Mutual Funds -- When Index Funds are Cheaper and Perform Better

The Motley Fool

In 2021, investors paid almost $90 billion in total fees on about $14 trillion of actively managed mutual funds to an industry flogging a product demonstrably inferior to index funds. Active vs. passive funds It's quite a problem, and a seemingly puzzling one, too. Image source: Getty Images.

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Want to Outperform 98% of Professional Mutual Fund Managers? Buy This 1 Investment and Hold It Forever.

The Motley Fool

Professional fund managers tend to be highly educated, hard-working, and extremely smart. But it doesn't take a highly complex trading plan to come out ahead of 98% of professional mutual fund managers over the long run. So, the odds are already against fund managers from the start. Image source: Getty Images.

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You Can Outperform 88% of Professional Fund Managers by Using This Simple Investment Strategy

The Motley Fool

It doesn't take an advanced degree or special insider knowledge to do better than the vast majority of actively-managed mutual funds. It's a strategy Warren Buffett famously bet half a million dollars on with the expectation it could beat any hedge fund manager over 10 years. That means mutual fund investors have to pay fees.

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This Simple Investment Strategy Outperforms 88% of Professional Fund Managers Over the Long Run

The Motley Fool

You don't need to be a Wall Street insider to beat most actively managed mutual funds. A simple investment strategy has outperformed nearly 88% of funds over the past 15 years, and its relative performance typically gets better over time. Here are the most recent results for large-cap funds. Image source: Getty Images.

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You Can Outperform 98% of Professional Fund Managers by Using This Simple Investment Strategy

The Motley Fool

And in an ironic twist, the less competitive you are, the better you'll be able to stick with a strategy that can lead you to after-tax returns that beat 98% of professionally managed mutual funds. All you have to do is buy a broad-based index fund and hold it for years. That's why mutual funds charge fees.

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Want to Outperform 88% of Professional Fund Managers? Use This Simple Investment Strategy.

The Motley Fool

It's a quirk of stock market mechanics that makes a simple investment strategy far better than the average actively managed mutual fund. While it might be possible for many professional funds to outperform over the short run, it gets harder and harder as time goes on. There's a big drag on active funds' investment returns: fees.