Bad news for large-cap mutual fund managers: The Standard & Poor’s 500 Index beats you two out of three times. A study by Prof. Burton Malkiel of Princeton University also found that the one-third that did beat the S&P500 still stand a good change of underperforming the following year. The good news is that, in another survey, Credit Suisse found that over 10 years, 31 funds in a 2003 study outperformed the indices. The success of those funds, says CS, was due to the fact that experienced much lower turnover – an average of 30% – than the 110% industry average; the managers looked for undervalue stocks; and they had an average of 37% of their assets in their 10 top holdings. Geography also was a factor. The best performers came from outside New York or Boston, in Baltimore, Chicago, Memphis, Omaha and Salt Lake City. As for the success of the indices, low turnover was also a key factor as well as the fact that those who pick the stocks usually base their selection on liquidity and performance over our quarters.