Cale Smith, godfather of the Spoke Fund and portfolio manager at Islamorada Investment Management, maintains a blog that I highly recommend that goes by the moniker of Cale in the Keys. Whether or not you choose to take me up on that recommendation, if you own actively-managed mutual funds I implore you to at least review a recent post on the topic of closet indexing. In it, Cale plainly articulates the reality of most actively-managed mutual funds today: they have way too many holdings to know a lot about each of them, and even if they do have precise knowledge of each and every one, it doesn't matter. That is because the sheer number of holdings ensures that the fund will approximate the index that it most closely resembles, while charging significantly more in expenses than the average index fund. In other words, it will likely underperform the index, especially when fees are considered. (Side rant: not all index funds are cheap. Check out the B shares of State Farm's S&P 500 index fund - SNPBX: 1.5% expense ratio plus a deferred load of up to 5%. Ouch!)
Check it out.