One example of the difficulty in beating a passively managed benchmark or fund: The DFA Large Value Fund (passively managed) ranked #12 of 349* US large value funds for the ten years ending March 2006, produced 11.74% annualized return, 3.40% annualized better return than the group average. The #1 ranked fund, the FAM Value Fund produced just .74% better annualized return. However, the return for the full common time period of the two funds (April 1993-March 2006) shows the FAM Value Fund underperformed the DFA Large Value fund by .53% annualized, hardly inspiring the idea of value added associated with skillful management.

*Source: Morningstar March 2006

Source: www.investorguide.com

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