you are right about the fact that a lot of funds can't beat the benchmark.Let me explain why it is so. warren Buffett has a lot sayings. But one of his statement is like this:" the biggest edge as a retail investor is the "size". If you give me $1million, I can easily achieve 100% or even higher return. but if it is $20million, the return may be dramatically reduced." For US market, except for those very illiquid stocks, a 6- figure or even low-end 7 figures US dollar market order could be easily absorbed within a second. This is exactly the 'edge' for the retail investor, because a retail participant can get in and out of a stock at whatever price with desired quantity within split second. However, the story is totally different for FUND. A fund has a lot rules and constraints. The set of the rules specify minimum market cap of the stocks they can purchase, minimum holding period, maximum shareholdings, a necessary liquidation (cut loss)requirement, and many others. Therefore, there is a natural tendency t (more...)