Mutual funds success and failure

I am currently reading the book A Random Walk Down Wall Street on investing.

The author claims, based on several studies, that most mutual funds do not consistently outperform the broad market index.

To put it in another way, the large fund houses that have billions at their disposal and that have dedicated team of smart people for researching companies do not consistently outperform the broad market.

The nuance here is that, sure, many of these mutual funds will outperform the market by a large margin some years. But you cannot predict which ones are going to be the winners based on their past historical performance. If that was possible, you can soon be a millionaire or more by just timing your investments in the winners each year. Doesn’t that sound fun and easy?

Alas, that is not possible too. Despite their high fees in comparison to the index funds, they still do not beat the market in the long term.

Investing is not easy.

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