Outperform Market: Look No Further Than Gold, Bonds, Leverage

Is the market efficient? In other words, can one outperform the market? Most people would argue the market is semi-efficient as best; yet it is still difficult to outperform the market in the long term. After all, out of thousands of hedge funds that claim they have superior investing skills, only a handful have delivered alpha consistently in this $3T industry. So why pay such high fees for no better returns than can be achieved by indexing? For this very reason, passive investing has benefited enormously in 2016. According to Morningstar, active equity funds had $340B in outflows in 2016, while passive equity funds generated $505B of inflows (source: corporate.morningstar.com/US/documents/AssetFlows/AssetFlowsJan2017.pdf).