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The way to non-average returns is through a non-average portfolio, either through above average selection skills or maybe through increased volatility. In essence it’s the placement of big bets, with above average gains or losses. Mutual funds are required by law to maintain a minimum level of diversification (making it harder to be non-average), while hedge funds are not. Mutual funds often have high returns in their early years, when they have a small investor base, becoming more average as they grow larger. Hedge fund data appears to suffer from serious survivor bias, with a lower average returns than is reported.
Index investing is simply the logical conclusion that a large fund holding many securities will likely have relatively average returns, and that there is no need to pay high prices for average returns. Add to that the higher investing costs and taxes triggered by turnover from active management, and the active manager has a steep hill to climb.
Magazines are for entertainment, and need a new ‘hook’ each month to make a sale.
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