While index funds typically underperform their benchmarks because their performance is handicapped by their small expenses, the median net difference has usually been well under one percentage point over the last 10 years, according to a "Index Fund & ETF Performance, a Lipper research report. "Index funds are just slightly underperforming their benchmarks," according to the report.
The average total expense ratio for institutional actively managed mutual funds is 0.909%, while the average total expense ratio for institutional index funds and ETFs is 0.550%, the report says.
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