be sacrilege to suggest that these returns could be an outcome of luck rather than skillfund managers tend to compare their performances with the median returns made by their peer group this is a modified version of the average taking into account the possibility that larger number of funds could be concentrated at the top and bottom of the league tablethere is also the argument that earning higher returns is easier in the indian markets than in the developed markets this argument stems from the predominance of growth businesses in india where several untapped opportunities enable firms to grow and expand exponentially however the risk that many of these firms also fail trying to chase those very opportunities and that an evolving market tends to offer more macro risks is not usually discussedinvestors who made above average return are those who held stocks of the businesses they created or held concentrated high conviction bets in a few stocks and businesses or focused their attention on a few sectors each of these strategies hold a high risk of failure just as they hold the possibility of successto protect ourselves from these risks we diversify we hold stocks across sectors and firms so we are somewhat cushioned from losses the more we diversify the more we tend towards the average realistically safe strategies for the common investor tend to deliver returns that are closer to the average as a rulewe do not know which stock will do well so we buy many we are not sure which mutual fund will do better than the others so we choose a few different types we do not know if the ipo we buy will list as a winner so we buy a few to allow for some hits an misses on the whole almost as a habit we end up averaging our returnswe tend to overstate things and believe in the extremes than in the average we brush aside the average since it connotes something ordinary in our minds but the average is what things tend to with time and longterm investment returns are not an exceptionthe author is the chairperson of the centre for investment education and learning