Comment by FundThrowaway

This whole index funds outperform actively managed funds claim needs a lot more context. I always see adverts from people like Vanguard claiming such things but they are always just talking about raw returns they never take into account risk adjusted returns or the like. Not all returns are the same, you need to think about the risk taken to get those returns, a market neutral actively managed portfolio may return less than a passive fund but it's volatility will be much lower to.