"Makes you wonder whether this active management is worth the...

"Makes you wonder whether this active management is worth the effort, especially after all the fees and costs are taken out."

Depends what you are after. If you are after downside protection and your active fund manager offers it, then it may be worth it.

Personally, I like to look deeper beyond the returns generated against the index when choosing a fund. If for example, the index returns 10% and my active fund manager returns 8% for the year... but looking deeper into the active fund managers holdings, they were holding an average cash position of 20% for the period and employed a long/short strategy - I'd be very happy with how my fund manager performed.

What it tells me is that while they 'underperformed' when compared to the index, it was the price they paid for downside protection - cash and shorts. The question is whether you wanted this kind of downside protection or not. Personally, I do with this part of my portfolio.

Have a look at the performance of Platinum Asset Management's International Fund for example. From top to bottom their biggest fall in their history was only around 22% which I think was the GFC. Compare that to all indexes and you'll find they outperformed by a long long way.

I did some number crunching awhile back and found that a lot of Platinum's outperformance comes not from doing better than the market during an extended bull-market, but from not losing anywhere near as much as the index in a downturn and subsequently being better positioned to then take advantage of the opportunities that arise when the inevitable downturn occurs as a result.

If the current debt-driven P/E expansion bull market continues, then expect many funds like Platinum to continue to underperform. But if there is a correction and the tide comes out, you may find they have good cover while others... well not so.