Most professional money managers aren't trying to beat the market. Distribution is way more important than performance. Trying to outperform the market is risky

Most professional money managers aren't trying to beat the market. Distribution is way more important than performance. Trying to outperform the market is risky. Even if you have a good fund manager, they will eventually go elsewhere (if you look at most of big managers, but not all, their business model is turning a 0x employee into a 1x employee...10x employees get paid their marginal product). The key to running an asset management business is marketing, and building assets with unsophisticated clients that won't sell (mainly retail investors/advisers). This doesn't work as well anymore but it is very weird to argue that mutual funds are meant to beat the market. That was never the pitch. It is also fairly straightforward to outperform the market if you are a retail investor, you have a huge edge: size. You have just to look at the stuff that no-one else is looking at. I am not sure why but people have extreme amounts of difficulty with this concept. People become investors because they want people to think they are big time, they want respect...they don't really care about performance. I remember a few years ago, when I worked in the industry, I came across a one-month 15% arb. My job at the time was to pitch ideas, and no-one was interested..."it isn't what we/I do". I cleaned out my account, sold everything, borrowed a substantial amount...99% of people won't do that. It is crazy to them...but investing is simple: look at what everyone else is doing, and don't do that because it is fucking dumb. Also, most HFs don't have non-public information...sorry, they just don't. Some people are just genuinely better at making decisions than other people - 95% of people make the same mistake over and over, regardless of intelligence...ppl who are too smart usually do worse imo - and the most successful get around the problem of scale (a good example is Baupost: they invest in complex stuff that no-one else is trading).