It's the finance industry's worst-kept secret. Over the long term, the majority of active managers underperform their benchmarks. In fact, SPIVA data shows that over a 10 year period, 79.82% of funds underperformed the S&P/ASX 200.

Many believe this underperformance is thanks to the proliferation of index-like funds. While others believe it is because managers are forced to invest in more stocks as funds under management grows. Then, of course, there's the matter of fees detracting from performance.

But according to a study by US-based portfolio manager and author Robert Hagstrom, a high conviction portfolio of investors' best ideas can increase one's chances of outperformance.

In fact, he found that a randomly generated portfolio of 15 stocks would generate a maximum return of 26.6% annually over a period of 10 years. For 50 stocks, this was 19.2%. Meanwhile, among the portfolios with 250 stocks, the best return possible was 16% per annum.

So in this episode, Livewire's Ally Selby was joined by Perpetual's James Rutledge and WaveStone Capital's Raaz Bhuyan - two high conviction fund managers - for their analysis of each of their two top holdings.

Plus, we also asked our fundies to analyse two market darlings that could be in for some troubled times over the months ahead.

Note: This episode of Buy Hold Sell was shot on Wednesday 30 March 2022. You can read an edited transcript below:

https://www.livewiremarkets.com/wires/buy-hold-sell-4-top-stocks-and-2-that-have-lost-their-shine/