Most managers lose to the index they're paid to beat

An active fund pays a manager to pick investments, hoping to beat a plain index. An index fund just copies the index, cheaply.

S&P's SPIVA scorecards, published regularly for both the US and Europe, consistently find that most actively managed equity funds trail their benchmark index over 10 to 15 years, after fees.

An index fund might charge 0.2% a year; an active fund often charges 1% or more. That extra 0.8% has to be earned back in performance just to break even with the index.

A fund's past 3 good years sound convincing. Comparing it against its own benchmark over 10 years, after fees, tells a more honest story.

A fund's factsheet names its benchmark. Line the fund's long-run return up against that benchmark's, after fees, before trusting a short run of luck.

Most active funds trail their benchmark over the long run, after fees. Check the comparison, not the headline.