FYI: Beating the stock market may be easier than you think. All you have to do is pick the right benchmark. The good news is there are a lot of choices.
For instance, imagine that you are a large-cap value manager. Do you compete against the Russell 1000 Value index or the S&P 500 Value index? Both are well-known, widely-followed, and respected benchmarks for the large-cap value sector. And, yet, only one of them invests in Apple. AAPL, +2.84%
That makes a big difference, since both indices are cap-weighted and Apple has one of the largest market caps of any stock. Its presence or absence therefore plays an outsized role in the performance of a cap-weighted index. The stock currently represents 8.7% of the SPDR S&P 500 Value ETF SPYV, +1.40% , but has no allocation in the Russell 1000 Value Index.
Regards,
Ted
https://www.marketwatch.com/story/why-its-tough-to-tell-if-a-mutual-fund-manager-has-really-beaten-the-market-2019-11-01/print
