After the market rout of the past year and a half, countless investors are re-thinking some of their most cherished maxims: Are stocks really a good long-term vehicle for creating wealth? Is buy-and-hold dead? Should I just stuff my retirement money under my mattress?

Some discouraged investors have decided to take the path of least resistance -- they've thrown in the towel and resigned themselves to never beating the market.

Content to be average
According to data from Lipper, investors yanked over $221 billion out of actively-managed mutual funds in 2008. So, where did that money go? Well, a big chunk of it was funneled into passively-managed index funds and exchange-traded funds like Spiders (NYSE:SPY) and the iShares Russell 1000 Index (NYSE:IWB). Index funds saw new inflows of over $17 billion last year, bumping up their share of the mutual fund market to 13.2%. Apparently, scores of investors are giving up on ever being able to outperform the market and are content to merely match its return.

And who can blame them? Many actively-managed funds have done a dismal job of keeping pace with the market during this most recent downturn, losing more ground than some benchmark indices. Some fund shops were caught flatfooted by the crisis in the financial arena and lost big on names like Citigroup (NYSE:C) and Fannie Mae (NYSE:FNM).

Furthermore, it's absolutely true that the vast majority of active mutual funds don't beat the market. It leads one to wonder why you should pay for the advice of a fund manager if you're just going to lag the market anyway. Why not just throw your money in an index fund and be done with it?

Diamonds in the rough
While abandoning the game of trying to outperform the market may be appealing in tough times, if you do give up, you're leaving a lot of money on the table. And while they definitely have their problems, I wouldn't count actively-managed funds down for the count just yet.

It's true that most such funds simply can't beat the broader market over the long-run, but there are a select number of exceptionally skilled managers who do manage to trounce the market. The problem lies in finding these needles in a haystack of competitors. Fortunately, there are a few easily identifiable features that almost all top-notch funds have in common.

In the Winners' Circle
One of the first things to look for is funds with a long-tenured manager or management team at the helm. Numerous academic studies, such as a 2004 study in The Journal of Investing performed by Greg Filbeck and Daniel Tompkins, have proven that funds with longer-tenured managers tend to outperform funds with newer talent on board. For example, the Stratton Multi-Cap Fund (STRGX) has been run by manager James Stratton since its inception in 1972. For more than three-and-a-half decades, Stratton has invested in high-quality companies like Owens-Illinois (NYSE:OI), Harris Corporation (NYSE:HRS), and Schnitzer Steel Industries (NASDAQ:SCHN) -- and racked up a first-rate track record doing so. Over the recent 15-year period, the fund outranks 96% of its peers!

Low expenses are another hallmark of top-performing funds. Of course, common sense tells you that lower fees mean that it's easier to top the market, since you're getting more of a return for your money! Some of those same academic studies that highlight the importance of manager tenure have also proven that lower-priced funds tend to do better in the long-run than their more expensive counterparts. Likewise, if you own funds in a taxable account and tax efficiency is important to you, look for funds with a low annual turnover.

When putting funds under the microscope, make sure you choose one that has utilized the same consistent investment process over a long span of time. You don't want a fund that changes its stripes when certain investment styles or fads come into fashion, but one that relies on its core expertise and style of investing. One big thing to look out for here is small-cap funds that have gotten too big for their britches and now lean more heavily into mid-cap and large-cap space, thanks to an oversized asset base.

Lastly, while past performance is usually the most important factor investors use in purchasing mutual funds, it should really only be examined after you make sure a fund meets all of the above criteria. Look at how a fund has performed in both good and bad market environments. This should give you some indication of how it will perform in those types of markets in the future. Like the disclaimers say, there is no guarantee of future performance, but choosing a fund that has added value in both bull and bear periods increases the odds that the fund will outperform in the coming years.

Of course, if you want to save yourself the work and find out with one easy glance which mutual funds amongst the thousands out there measure up to these exacting standards, check out the Fool's Champion Funds investment service today. As the lead advisor, I strive to find winning recommendations each month. After five years, our recommendations have returned an average of 12%, while equal amounts invested in the S&P 500 would have lost 22%. You can see all our winning fund picks with a free 30-day trial.

Some investors may have given up on trying to beat the market, but that's no reason you have to. There's money to be made for Foolish investors -- you just have to know where to look.

Amanda Kish heads up the Fool's Champion Funds newsletter service. At the time of publication, she did not own any of the companies mentioned herein. The Fool owns shares of SPDRs. Click here to find out more about the Fool's disclosure policy.