I've lost track of how many mutual funds exist today, but it's something over 6,000. Not that the exact number is important. What is important for investors to understand is that the vast majority of mutual funds underperform their benchmark after expenses, which currently average around 1.4% per year. Furthermore, the academics (although not Wall Street) will tell you that it's impossible to pick a fund that will outperform its peer group, except in hindsight!
Adding insult to injury, mutual funds, by and large, don't practice the long-term investing that they preach. The typical mutual fund turns over 80% of its portfolio yearly, meaning the average holding period for a stock is only about 15 months. Taxes eat away at an investors return every bit as much as the fees, not only because of the high turnover, but because you frequently are responsible for paying capital gains taxes on gains you didn't receive.
