Why do most mutual funds trail the market?

Interesting insights from a retiring Morgan-Stanley investment strategist. In any given year, 60 percent of managed funds underperform their market segment (I have read other sources that say it is 70 percent).

But in fact, raw numberS reveal that half perform higher, half lower - before management fees are deducted.

It's the fees that drag many funds' overall performance below their index.

Long piece, worth the read: