Why bother picking stocks yourself? Why not entrust the job to fund managers? They have teams of analysts helping them; more time to research stocks; and better access to brokers and other experts than you do.
The answer is that although fund managers have these advantages over you, you have some offsetting edges over them. But you might not all be exploiting these as much as you should.
To see one of these, consider one of the best-performing and most popular funds, Lindsell Train’s Global Equity Fund. It manages £8.7bn invested in 25 stocks. That’s an average position of £350m. Such huge positions, however, mean there are many stocks it cannot buy: £350m is equivalent to over a third of the value of most FTSE 250 companies. Of course, it could take smaller positions, but doing so would make little difference to its returns. If a £50m stake were to rise 50 per cent, it would add less than 0.3 per cent to its total return, which is less than the difference between a good and an average day.