Friday’s column showed how excess returns for the average diversified U.S. stock fund have slipped. Five years ago, the typical actively managed fund comfortably had beaten its benchmark index over the trailing 10 years before expenses, meaning that many also had done so even after paying their expenses.
Index funds had become the sales leaders because they were more transparent, simpler to understand, and delivered no surprises. But on performance alone, the actively managed funds could make a case for themselves.
John Rekenthaler does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.