Bogle on the Fund Industry

From Marketwatch:

"The mutual fund croupiers rake huge sums off the stock market table," says Bogle. He estimates that management fees average 0.9%. Other expenses are 0.6%. So the average expense ratio is 1.5%, five to seven times the take for index funds.
Next deduct "hidden portfolio transaction costs of at least 0.8%" from managed funds says Bogle. Then deduct the long-term costs of "sales commissions on load funds, another 0.7%." So the total cost in an actively managed fund can run as high as 3%, leaving investors with just 4% on a 7% return.
But it's even worse on an after-tax basis: "Because of the shocking tax inefficiency" of funds' average turnover, which is greater than 100% for an actively managed stock portfolio, you deduct another 2.2%, says Bogle.
Bogle goes further and compares the results of compounding the two alternatives over a 20-year period: "The cumulative profit of each $1 initially invested in the managed fund came to just $1.55 in real terms, after taxes and costs, only 34% of the real profit of $4.50 in the index fund." In short, indexing is almost three times more profitable.