Albert Nicholas is well aware that some prominent academics say stock pickers can’t beat their benchmarks over the long haul. He doesn’t have a Ph.D., yet he has good reason to disagree, Bloomberg Markets magazine will report in its April issue.

The Nicholas Fund, which he has run since 1969, has topped the Standard & Poor’s 500 Index by an average of 2 percentage points a year for the past 40 years and has beaten it every year since 2008. If you think that doesn’t make a big difference, consider this: A $10,000 investment in the Nicholas Fund in September 1974 was worth about $2 million in September 2014, roughly twice the value of the same investment in the index.

“Some guys who are smarter than I am say we can’t outperform like this,” says Nicholas, who turned 84 in January. “But we have done it, so I will leave it at that.”

Nicholas has been especially hot since the end of 2009, riding longtime holdings such as auto parts retailer O’Reilly Automotive, up fivefold in the five years ended on Dec. 31, and money manager Affiliated Managers Group, which tripled in the same period. Nicholas has owned stakes in both companies for more than a decade.

The numbers made the Nicholas Fund No. 1 in the diversified U.S. equities category in Bloomberg Markets’ annual ranking of mutual funds.

The winners in the rankings all pick individual stocks and bonds. The rankings are based on U.S.-domiciled funds with more than $250 million under management as of Dec. 31. Funds are ranked by total returns for one, three, and five years and by their Sharpe ratios for three and five years. The Sharpe ratio measures the performance of funds adjusted for risk. Each of the five measures is given equal weight.

Active managers have been on the defensive of late. In 2014, just 21 percent of the funds that pick U.S. stocks beat their benchmarks, according to Morningstar. Investors have noticed and voted with their feet, swapping their actively managed funds for low-cost index and exchange-traded funds.

Last year, actively managed mutual funds that buy U.S. stocks suffered a net $98 billion in redemptions, while domestic stock index funds and ETFs attracted a net $167 billion. ETFs, nearly all of which mimic indexes, received $95 billion of the total.

The two biggest recipients of mutual fund cash last year were Vanguard Group, the index fund leader, and Dimensional Fund Advisors, an Austin, Texas, firm that sells index funds with a bias toward small-cap and value stocks.

“Conventional active managers promised a lot they were not able to deliver,” says David Booth, Dimensional’s chairman. Booth’s mentor, University of Chicago finance professor Eugene Fama, who shared the Nobel prize in economics in 2013 for his work on efficient markets, is equally dismissive of stock pickers. In a 2009 paper he wrote with Kenneth French of Dartmouth College, Fama concluded that actively managed stock funds collectively return about the same as the stock market as a whole, minus the fees they charge.

Notwithstanding the academic research, the great bulk of fund money is still actively managed. Some $13.1 trillion was invested in U.S. mutual funds at the end of 2014. Of the $8.3 trillion in stock funds, 38 percent was passively managed. Yet that’s double the percentage at the end of 2004.

Although the money in U.S. ETFs has grown rapidly, from less than $100 billion in 2000 to $2 trillion today, it’s still a fraction of the total amount in mutual funds.

The increasing popularity of passive investing has forced stock pickers to speak up. The normally publicity-shy Capital Group, which runs the $1.1 trillion American Funds Complex, all of whose funds are actively managed, published two research papers in the past two years. One quoted statistics indicating that most American Funds offerings beat their benchmarks over time, while the other asserted that actively managed funds with low expenses and high manager ownership usually outperform.

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