How to Beat the Benchmark

Jan 2006

Because real-world stock portfolios incur costs for transactions and management, while the S&P 500 reflects no costs whatsoever, any portfolio that’s reasonably close to the S&P 500’s composition is almost guaranteed to lag this index…  Simply stated, portfolio managers who want to beat the S&P 500 over the long term must create portfolios that are significantly different from the S&P 500.