OT - Investing 401k

[Lord McBuckethead]

Alright, I am moving our 401k for the office and had an opportunity to go through some outside investment managers portfolio which seemed pretty good overall as far as its diversification but they list the S+P 500 as their benchmark for comparison.....

Why can't any of these managers get even close to matching the return? Paying them 3% fee for substandard returns against the S+P index funds seems like criminal malpractice by every fiduciary on the planet. I get that they don't go up as high as the S+P when they have a good year, and they don't drop as much when they have a bad year, but over 15 years if the actively managed funds are at 6.66% return average versus the S+P at 10.66% return after fees..... why would anyone ever do the the actively managed fund? It is damn simple math.

Hypothetical Actively Managed Account = 3.8% fee
10 years, $10,000 investment at 6.6173% after fees = $18,979.15 balance after 10 years $36,020 after 20

S+P 500 Index Funds = .015% Fee
10 years, $10,000 investment at 10.666% ave return = $27,476.71 balance after 10 years $75,907 after 20

I am looking at losing about 40k per 10k I have invested until I retire.


Does any of that seem crazy to anyone?