This is an interesting observation. Most of us can pick up good MF after it has performed well for more than few years. So there is no guarantee about its future similar performance.
While in stocks, you can start investing when its ROE/ROCE is improving and then can hold it for longer period and take advantage of its better performance till we can see some stagnation in its performance.
Individual investors can actually perform better than Index if they hold onto high quality stocks for longer periods. Most of the investors do not do this hence they (including me) do not beat index with wider margins. We generally generate some Alpha but not up to its true potential since we tend to switch from stock to stock, based on our understanding of valuations, noise around us, news so on and so forth.
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