It's all well and good to say you've invested in the stock market for many years but being able to consistently beat the market with your own stock picks is a real achievement.
Whilst it can be fun or intellectually stimulating to research companies and try our hand on the stock market, if we can't beat it then it makes sense to just buy a low-cost index fund.
How you can start beating the market today
If you're new to investing it's important to find reliable information sources. Start by reading the news and then move onto taking snippets of advice from your favourite investors, gurus, advisors or fund managers.
One Australian investment firm I like to keep tabs on is Wilson Asset Management. Its smallest fund is WAM Active Limited (ASX: WAA).
Since its inception in January 2008 – right before the GFC took its biggest toll on Australian stocks – the fund has returned 13.3% per annum, outperforming the All Ordinaries (INDEXASX: XAO) by a whopping 10.9%.
Shares in WAM Active currently trade on a trailing dividend yield of 7.1% fully franked (10% grossed-up) and approximately 1.3 times net asset backing.
Whilst I usually avoid investing in fund managers that are trading significantly above their book value, WAM Active seems very appealing for those focused on yield and modest capital gains.
The fund uses an active trading style to deliver a growing income stream to shareholders, whilst preserving capital. It uses a variety of strategies – long or short – to do this.
In August 2014, the company provided its regular investment update which showed 62.3% of its funds were invested in listed equities, all investments were long.
However, the update also showed some of the ASX-listed stocks the fund currently holds. The table below shows five you may never have heard of…
| Company Name and Ticker | Market Capitalisation | Dividend yield |
| Century Australia Investments Limited (ASX:CYA) | $70 million | 5.70% fully franked |
| Hunter Hall Global Value Limited (ASX: HHV) | $212 million | 5.8% partially franking |
| Hills Ltd (ASX: HIL) | $310 million | 5.4% fully franked |
| Genworth Mortgage Insurance AustraliaLtd (ASX:GMA) | $2,230 million | 4% fully franked (forecast FY15) |
| Westoz Investment Company Limited (ASX: WIC) | $155 million | 7.5% fully franked |
Source: WAM Active Investment Update and Morningstar.
As can be seen from the table, the fund appears to target smaller companies, in particular listed money managers.
Should you buy in now?
It isn't easy to beat the market year-in year-out, but new investors looking to try their hand at doing so should take note of the successful investors around us.
Along with Contango MicroCap Limited (ASX: CTN), WAM Active is one listed fund manager I'd gladly hold.
