Why Picking the Right Fund is Harder Than You Think

Many investors turn to funds instead of individual stocks, assuming it’s a safer or easier approach. But here’s the challenge: finding a great fund is often harder than picking a great stock—and picking a great stock is already difficult.
The issue? Diversification within funds often leads to holding many underperforming stocks that drag down overall returns. And with so many fund types—growth, value, large-cap, small-cap, bond, international, sector-focused, and more—choosing the right one is overwhelming.

Even if you pick a strong fund today, fund managers change, strategies shift, and performance fluctuates depending on market trends. Historically, most investors underperform the S&P 500 when using funds.

So what’s the better alternative? Instead of struggling to find the right fund, investors should either buy the S&P or use a proven model like the Stars strategy. Few, if any, funds can consistently match Stars’ 25-30% annual performance.