Funds have the advantage of professional investor management, but according to the data of the past decades, more than half of the funds in the market expect lower returns than the market index in the same period. If the level of retail investors is not high and the expected return is lower than the index, it is acceptable. Why is the expected return of professional fund managers often lower than the index? Is it because the fund manager's level is not good and his professionalism is not strong? In fact, these two reasons are crucial.

1, zero-sum game

In the process of stock market investment, all parties to the transaction reported three types: retail investors, large households and professional investors. In the process of investment, there will be no capital growth in itself, and some people will naturally lose money when they make money. This is a zero-sum transaction. On the whole, the trend of the index is similar to the speed of economic growth and remains at the average level of a market. Coupled with arbitrage institutions, this determines that the expected rate of return of most investors in the market will be lower than the overall expected rate of return of the index.

2. Transaction costs

The transaction cost of fund managers is the same as that of ordinary investors, including three parts: the transaction commission charged by brokers, the transfer fees charged by the Exchange and China Depository and Clearing Corporation, the settlement fee and the stamp duty charged by the state. These fees must be paid for every transaction, regardless of profit or loss. After one year, the transaction cost will account for 3%-5% of the investment principal, while the expected return of the index has no transaction cost, that is, the expected return of professional investors must exceed 5% of the expected return of the index.

The above two points are doomed that even professional fund managers are not easy to outperform the index, so before investing, we must have a full investigation and objective evaluation of the company before buying. Tips: Financial management is risky, and investment needs to be cautious.