I'm sure I'm overlooking something, but if its possible to beat the market by actively trading stocks, how come a vehicle like this doesn't exist?:

I'll give you $100,000 of mine to invest. I'll pay you $7,000 up front to manage it. You can invest the money however you want to.

In exchange I want: - The ability to get out whenever I want (within 3 months of request) - An APR on my $100k principal of 1% over the S&P 500

For example, if I stay in for 10 years and the S&P 500 appreciates by 10% (259,374), you owe me an 11% rate of return (283,942). This gives me a "true" return of 10.25% or 0.25% guaranteed over the market. If the market plummets and has a rate of return of -20%; you owe me -19%. Simple.

If the market is easy to beat, all you have to do is take my $100k, invest it in actively-managed mutual funds (the 7k can cover the fees) and keep the spread. Yet nothing like this exists. Why?