The Simple Investment Strategy That Beats 89% of Active Funds

Active fund managers have teams of analysts researching companies, watching markets and deciding exactly what their funds should buy and sell.

If anyone should be able to beat the market, surely it is them.

Yet over 15 years, 89% of active Australian share funds failed to do it.

It is a result that challenges one of the most tempting ideas in investing: that more research, more activity and more expert decision-making should produce better returns.

So why does a far simpler investment strategy keep coming out ahead? And what could that mean for the way you are building wealth?

In this episode, Nick and Paul unpack why trying to beat the market can leave investors further behind, and why the latest results strengthen the case for the index-at-the-core approach we favour at Guidance Financial.

They also look at another risk many investors miss. You could own hundreds of companies and still have far more of your wealth riding on the same industries than you realise.

Inside this episode:

Why so many professional fund managers struggle to beat the market

The small group of shares that can have an outsized effect on returns

What investors risk missing when they try to choose the winners themselves

Why a portfolio can look diversified without being properly diversified