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Quick question:

I heard a co-worker say that "most" mutual funds beat index funds (S&P 500) if you consider the "risk adjusted return." Is this true? My co-worker also pointed out that index funds are weighted by market capitalizaiton so when you invest in an index funds you do not get an equal share of all 500 companies. Is this true? Thanks for your help in clearing up these cloudy skies.


P.S. I do not have spell check so the spelling could be a little unfoolish.
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Hi, Adam!

I'm not sure what a "risk-adjusted return" is, but in real life, real money returns, more than 85% or so of managed mutual funds lose to the S&P 500 index each year.

Yes, it is true that the index is weighted and does not represent an equal portion of each company.

Thanks for positing and Fool on!

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