Recently a number of market observers have suggested banning actively managed mutual funds from retirement plans as a way of increasing participant balances. Their logic is that actively managed funds don’t beat market averages or benchmarks often enough to justify their higher fees. Also, it is said that actively managed funds tend to be recommended by advisers who profit from their sale and therefore aren’t objective.
In certain situations, all of these comments may be true. However, there are good reasons for investors to embrace active management including:
