The news hasn't been good lately for actively managed funds and their investors. In 2011, only one-third of large-cap fund managers beat the S&P 500 index.

Given that large-cap is the single most popular strategy investors choose as their core equity allocation, this statistic indicates the vast majority of investors would have been better off ditching their actively managed fund for an index tracker. And to look at the asset flows disparity between equity exchange-traded funds (ETFs)—very popular—and mutual funds (mmm...not so much) over the past few years, it would appear investors are increasingly doing just that.

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