Berkshire Beats Entire Fund Universe

The fixed investment mandates of mutual funds and the pressures put on portfolio managers to deliver short-term gains take a head-turning toll on gains. Just take a look at the 20% annualized gains of Berkshire Hathaway over its 45 years of existence.

The only two mutual funds to come even close, The Wall Street Journal notes, are Fidelity Magellan, returning an average of 16.3% a year, and Templeton Growth, offering up 13.4%.

As Jonathan Rahbar, a mutual fund analyst at Morningstar, told The Journal of Warren Buffett's seemingly uncanny investment prowess: "Throughout his tenure, he's been a huge proponent of investors thinking about themselves as owners of companies rather than investors [which fits his] extremely long-term approach. Mutual fund managers have incentive to do well on a year-in year-out basis. If things don't go well for a year or two, they'll see outflows."

Timothy Vick, a senior portfolio manager at Sanibel Captiva Trust and author of the book "How to Pick Stocks Like Warren Buffett," added: "Mutual funds have to sell to institutions who lump them into style boxes and expect them to be fully invested."