The hurdles that money managers must overcome to meet Samuelson’s challenge and beat the market are extremely high. The vast majority of managers who try to do so will fail, even though many of them are extremely talented and dedicated. Casual investors have no need or reason to beat the market, no matter what active manager marketing may suggest. Owners of an S&P 500 index fund generally own shares in 500 excellent companies. There is nothing inherently wrong with that. Nor is there anything wrong with utilizing market “factors” to try to improve investment performance. But investors in “smart beta” or similar strategies shouldn’t expect outsized performance.
Investors who want or need substantial outperformance need to look for and at smaller funds with concentrated portfolios of quality assets that are held a long time to have a plausible chance of success. But these investors ought to understand that most such attempts fail and that the desired success is getting harder to achieve each and every passing day.