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Author: ataloss Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 757791  
Subject: Re: Index Funds, I don't get it? Date: 3/29/2001 7:33 AM
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Morningstar tracks 10,400 mutual funds. If only 15% beat the index funds, that is only 1500 funds. What if I take 5 to 10 of this group with track records of 3,5 and 10 years that are better than Index Funds? Doesn't that make the risk/return ratio better?

No, since "good" performance doesn't persist. Studies have shown that 4 and 5 star funds underperform the market (going forward.) M* compares each fund to the broad market and good performance usually reflects being in the right sector rather then management skill.
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