Professor Charles D. Ellis of the Rebalance Investment Committee explains the clear disadvantages of using actively managed funds rather than indexing. Read more about indexing, investing and your emotions.
If you had all of your investments in index funds and ETFs and somebody came along and said, “Boy, have I got an opportunity for you. It does involve a much higher fee. You got to get used to that. Secondly, you’ll have more taxes. Third, you’ll have more uncertainly and anxiety.”
“Fourth, it doesn’t actually — we can’t promise the results. We’ll make promises, but we can’t guarantee the results. And actually the experience is it doesn’t work terribly well on many different circumstances. And over the long term it just doesn’t do as well,” would anybody buy it? Certainly not.