In recent years, we have constantly been reading about how stock markets have been rallying and this in turn has been resulting in fund managers having a headache (LINK). Why? Clients when comparing the fund’s performance and the Index’s performance would probably only see a marginal difference. Perhaps the fund may even underperform the index net of fees. Furthermore, this has resulted in managers ‘closet indexing’ (LINK) and this phenomenon has been on the rise (LINK). Hence, this led me to think of a story that we are all very familiar with.
The Hare and the Tortoise
The Hare was once boasting of his speed before the other animals. “I have never yet been beaten,” said he, “when I put forth my full speed. I challenge any one here to race with me.”
The Tortoise said quietly, “I accept your challenge.”