Core Insights - Investors are increasingly favoring low-fee exchange-traded funds (ETFs), which have captured nearly half of all inflows this year despite representing only 8% of all ETFs [2][3] - Low-fee funds, particularly index trackers, have consistently outperformed actively managed funds, which have struggled to beat their benchmarks [2][4] - The average expense ratio for equity and bond mutual funds has significantly decreased, with a 62% drop for equity funds and a 55% drop for bond funds from 1996 to 2024 [5] ETF Performance and Trends - BlackRock's iShares and Vanguard's S&P 500 ETFs are leading in terms of assets under management (AUM), with Vanguard's ETF having a fee of just 0.03% and being the largest in AUM [3][4] - The performance of actively managed funds varies based on strategy, with growth-oriented managers having a better chance of beating benchmarks compared to value managers [4] Fee Structure and Market Dynamics - The pressure to maintain low fees has led to a general decline in expense ratios across the industry, with index equity ETFs seeing a decrease to an average of 0.14% [5] - The dominance of mega-cap stocks in recent market returns has made it challenging for active managers to outperform, as a small number of stocks have driven most index returns [3][4]