A Hard-to-Beat Investment Vehicle

When I was still learning how to invest, I searched for smart heuristics for selecting mutual funds---past returns, low volatility, "value" philosophy, etc. What I eventually learned is that ("active") mutual fund managers have such handicaps (large asset pool, short-sighted clients, non-trivial expenses, high visibility) that there's not much point in trying to find the "best". Even if you manage to find a mutual fund that is better than the rest, it won't be able to produce market-beating returns for long as money will pile in and/or other funds will mimic its behavior. A friend of mine suggested index funds when I was searching for the perfect mutual fund. At the time, I didn't think much of the advice. But, now, I realize how smart such advice was. One of the best index funds is VTSMX which indexes the entire U.S. stock market. VTI is its ETF sister fund. VTSMX is hardly ever one of the best, but it is consistently one of the better ones. Currently, it is better than 69% of funds in its category (10 year return) according to Morningstar. And, this ranking probably doesn't include the scores of funds which were closed over the past 10 years due to poor performance. Sure, you could pick one of those funds which has a better 10 year performance, but how do you know the outperformance wasn't luck? The VTSMX strategy is sufficiently simple that luck doesn't play a role. I think you can do better by investing in individual stocks. But, mutual funds have so many draw-backs that the effort to try to do better than VTSMX just ain't worth it.