Yeah, I agree that small investors who take the homework seriously can currently beat the averages. But the average investor can't, sort of by definition. And mutual funds can't, because the individual investors all insist on tracking every bubble on the upslope. So the funds have to buy crap or lose deposits.
IMO cheap index funds (0.3% or less) that really buy and hold the member securities are a pretty good deal for folks who won't/can't/don't do the homework. The real scams are the active funds that charge 2%, claim to be Value, and invest in like Mexican derivatives, or the "personal money managers" who charge 3% or more to put you in basically a short term bond fund (i.e., 3%).
But homework is out of fashion, and hopefully it will stay that way!