Re: Why Mutual Funds are better than Index Funds
You need to rethink you investment thesis and match the appropriate index to the mutual fund you are going to buy. If you own a mutual fund that is 100% large cap equity comp that against the S&P 500 index. Most older investors will start to move towards balanced funds that produce dividend income and slower growth (lower risk) which produces uncorrelated returns to the S&P 500.
Most mutual funds managers will try to closely emulate the index that they are comped against and rarely deviate from the underlying securities thus perpetuating the average performance of fund managers. In mutual fund world it's all about the management fees not stellar performance.
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