Those who read my columns here know I'm a stock jock. And those of you who are Motley Fool Rule Breakers subscribers know I've ridden Akamai Technologies (NASDAQ:AKAM) to a 162% gain. What you might not know is this dirty little secret: I'm also a funds guy.

What, you're surprised?
Oh, stop. I see that look of shock on your face. How could you possibly be surprised? I'm a Joe Oddlot investor. And, like most of the rest of my lunch-pail-carrying brethren, I own mutual funds. One, Julius Baer International Equity (FUND:BJBIX), I bought in the summer of 2003. My investment has increased more than $10,000 in value since, good enough for a 67% gain.

Hang out by the mutual fund water cooler
But that's not the real reason I should win this debate. This is: Some of the world's best investors have been, or still are, fund managers. And we've taken lessons from many of them to educate, amuse, and enrich you here at Fool.com. Consider this list:

  • Peter Lynch, who earned 29%-plus annual returns as head of Fidelity Magellan (FUND:FMAGX);
  • John Neff, who, over 31 remarkable years at the helm of Vanguard Windsor (FUND:VWNDX), amassed average annual returns of 13.7% vs. 10.6% for the S&P 500;
  • Bill Miller, who as head of Legg Mason Value Trust (FUND:LMVTX) has managed to beat the S&P 500 for -- get this -- 15 straight years;
  • And finally, Martin Whitman, who as founder and lead manager of Third Avenue Value (FUND:TAVFX) has absolutely crushed the S&P 500 and its typical Morningstar peer over the last 10 years. He's also a fellow Syracuse grad, which, naturally, makes him a genius.

Remember, too, that Lynch, Neff, and Whitman are authors of highly respected stock-picking manuals. Would you really have a problem casting your lot with any of these investors? I sure hope not -- for your portfolio's sake.

How to win with funds
What's more, there's a formula for selecting market-beating funds, just as there is the discounted cash flow model for determining whether a stock is trading on the cheap. According to Motley Fool Champion Funds advisor Shannon Zimmerman, the three characteristics of high-performance funds are:

An excellent track record. The best stock-pickers, Shannon says, run the best funds in the world. And great stock-pickers are typically consistent. Choosing funds with a long-term record of trouncing the market dramatically increases the odds of a market-trouncing performance in the future.

A committed manager. As with many of our other newsletter services, Champion Funds tends to focus on siding with managers who own large stakes in their own funds. Several recent champs fit this description, including Polaris Global Value (FUND:PGVFX), which has beaten its comparable benchmark by more than 9% since joining the portfolio in November.

Very low costs. One of the key principles to successful investing is to keep costs low. This is just as true with funds as it is with stocks, if not more so. Accordingly, Shannon's champs have some of the lowest expense ratios in the business. (The average was under 1% in December.) It's simply easier to beat the market when you lower the hurdle to doing so.

Now, doesn't all of that sound reasonable? It should. But if it doesn't, here's the proof that it works: The Champion Funds portfolio is beating its comparable benchmarks by nearly 13% as of this writing. More impressive still, only one of Shannon's picks is in the red. Yes, you read that right: One. All but six -- or 84% -- are up versus their benchmarks, many by double digits. Not even Ichiro Suzuki can touch that batting average.

The Foolish bottom line
Look, I get it. It seems strange for a Fool to be touting funds. This is, after all, a site founded on the notion that most mutual funds are bad for your portfolio, and that learning to invest in individual stocks is the best path to wealth in retirement. All of that is still true. But it's equally true that champion funds exist, and the they offer a very cheap way to rapidly build a diversified market-crushing portfolio. (Find out for yourself with an all-access pass to Champion Funds. It's free for 30 days.)

Does that means I'm no longer a stock guy? No way. I'll always want to choose my own investments. But I'm also smart enough to realize that there are many investors out there who are smarter than me. And I'll take any opportunity to profit from them on the cheap. I mean, who wouldn't? Not you, right?

Think you're done with the Duel? You're not! Go back and read the other three arguments, and thenvote for a winner.

Fool contributorTim Beyersthinks the easiest way to become a master stock-picker is to follow the moves of masters. That's why he likes funds so much. Tim owns shares of Akamai, a Rule Breakers pick, and the Julius Baer International Equity fund. You can find out what else is in his portfolio by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.