Then just buy the index fund. I can buy an index fund that has fees of 0.2%. If the managed fund has fees of 1.2% that means it needs to beat the index by at least 1% to come out even. If you can beat an index by 1% while trying to replicate an index, then you're either a genius or cheating.
The numbers are even worse if it's in a taxable account. That means you need to beat both the management fee and the taxes because you'll end up paying taxes for all the turnover too.
Well the idea is to beat the indexes on a net basis. The fees would be much lower (than 1.2%) because it would not be very active. It would be replicating the index (which lots of people can do fairly easily) but with a tweak or 2 like a slight change in weighting or trimming the 50 worst X or lopping off the 10 biggest caps. I've seen some back-testing on stuff like this that can get you that extra point or 2.
