[mikeash]

Isn't that last sentence the whole point, though? I thought that index funds didn't generally do better than actively managed funds in terms of raw returns, they just didn't do much worse, and the vastly lower fees mean that you come out ahead overall. The point of an index fund isn't to attain some sort of stock picking nirvana where nobody's really picking anything, it's just to get a fee of 0.04% instead of 2%, or whatever.