Small investors can, and should, achieve better returns than mutual fund managers.
That is because you are not bound by the mandate of the fund.
The mutual fund managers do not have the freedom to liquidate all assets, and keep all cash when they know that the market is heading for a major crash.
They have to keep invested because of the mandate.
They cannot keep 100% of the fund in cash.
When the mandate allows them to invest in big companies, they cannot sell the big companies and invest in small companies.
The mandate allows them to sell the shares of big companies, but they have to buy the shares of another big company.
They have to stay invested all the time, and keep a small portion in cash to meet withdrawals by the unit holders.
Everyone knows that you have to sell at the peak to lock in profits, and buy at the bottom.
If you are not allowed to sell, you will face paper loss when the market crashes by 75%, and your portfolio of $1000 becomes $250.