Large-Cap Funds Lose Alpha Edge Post-2010

Large‑cap mutual funds used to beat the market a lot, especially from 2000 to 2009.

After 2010, they still did better but the difference got smaller.

After 2020, they actually did worse than the market.

The main reason is that a rule says they must invest most of their money in the biggest 100 companies, so they can’t pick many different stocks.

Because of this, fund managers have less freedom to choose stocks that might do better than the market.

Investors should look at other types of funds that still invest a lot in big companies but can choose more stocks.

This way they can still get the best of both worlds.