From Mark Hulbert, MarketWatch: It has always been difficult for investors to consistently beat index funds. It has been nearly impossible lately. And there’s a double whammy: The small number of advisers who outperform the market rarely can keep doing so. One big culprit, experts say: the rise of sophisticated computer trading programs.
Consider the 51 advisers out of more than 200 on the Hulbert Financial Digest’s list who beat the market in the decade-long period that ended April 30, 2012, as measured by the Wilshire 5000 Total Market index, including reinvested dividends. Of that group, just 11 — or 22% — have outperformed the overall market since then. On average over the last year, they have lagged the Wilshire index by 6.2 percentage points.
That’s no better than the percentage that applies to all advisers, regardless of past performance. In other words, going with a recent market beater doesn’t increase your odds of future success….