Selecting winning funds

In his book, John Bogle said that it is difficult to select the winning funds.

He analysed 355 funds that existed in 1970. By 2006 (36 years later), the results are:

* 223 funds did not exist anymore (in most cases, the investors left the fund)
* 60 performed worse than market benchmark by more than 1%
* 48 performed within 1% (plus or minus) of benchmark
* 15 performed 1% to 2% better than benchmark
* 9 performed more than 2% better than benchmark

It is difficult to pick the 24 funds out of 355 funds. Most of these funds performed well when they were small. When they became big, their performance dropped.

There is no certainty that these 24 funds will perform well in the future. In fact, it is likely that they will not.

Lesson: invest in low cost, indexed funds.