Below-average results are really starting to hurt investors, but new research by Rik Frehen, a Dutch finance scholar, suggests that mutual funds are not bound to under perform or be overshadowed by pension funds. The trick is to not follow the trends of buying and selling based on short-term emotions, but instead to be patient and think more about the long term.

In his research, Frehen analyzed a period between 1992 and 2004 and looked at the returns of 4,000 mutual funds and 700 pension funds. In both cases, both pension funds and mutual funds underperformed the broader market in general; however, on average, pension funds only trailed by 0.1% a year and mutual funds were off by 1.4 percentage points.

Although it tends to be that case that traditional corporate and government retirement plans, which make up pension funds, achieve better results than mutual funds there appears to be an explanation. Quite simply, mutual funds charge more because they have higher operational costs. On the other hand, pension funds do not have to provide 24-hour toll-free phone banks, or distribute thousands of prospectuses for example.

But there is more to it than everyday expenses. What also accounts for much of the gap here is that mutual fund managers are judged and compensated based on the size of their portfolios, as well as their performance throughout the year.

Pension fund managers do not operate under the same pressure or stress, and they usually rely on a steady inflow of cash.

Perhaps the key to getting similar results from mutual funds as pension funds is to follow the advice of Vanguard's founder Jack Bogle, and just "buy right and sit tight."

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