Originally Posted by Swanman
Great post. As per 1) about 80% of stylized/managed mutual funds underperform the benchmark they are up against over time. And the difference in fees annually can be astounding, like 2% compared to 0.10%.
Further to this -- you aren't likely to pick the 20% that outperform the market and by the time you identify the one that is, everyone else has too and when everyone else jumps in, it will promptly stop outperforming the market because it will be unable to stay true to its investment methodology due to too much influx of cash.
So yeah, forget managed funds, by and large, unless it hits some kind of diversity type that you want and you don't like an index fund that covers it (unlikely at best).