During the last 100 years, not once has the average racer beaten the average speed.
There is a commonly held, but deeply misguided perception that the average active manager does not represent value for money because they cannot beat a capitalization-weighted market benchmark.
One aspect of this perception is true. The average active manager cannot beat a cap-weighted market benchmark. But that's where the truth ends.
The reason for that lack of outperformance does not stem from lack of skill, as is widely believed. This perception problem haunting active managers is rooted in a very simple, yet profound, misunderstanding both of market benchmarks and how the market works.