In other words, half of all actively managed mutual funds gained more than 19.8 percent, but the other half fell short. Hence another good year for indexing. And that shouldn't come as a surprise to people familiar with the concept. Most index funds charge relatively low expenses, which gives them a performance tailwind. Most index funds stay fully invested in stocks, which gives them an edge when the market is rising, as it normally does.
Most index funds sell stocks infrequently, which helps to minimize trading costs.
Perhaps the main argument favoring index funds for 1999 was that most performed about as expected. They closely tracked their benchmark. Among actively managed funds, the performance gap was much wider. In short, you can assume your index fund will finish near the middle of the pack each year, and usually a bit higher. That pattern held in 1999.