It assumes an efficient-market. The money is coming at the expense of fund B. It doesn't need to be a consistent loser, it just needs to make less than it other

It assumes an efficient-market. The money is coming at the expense of fund B. It doesn't need to be a consistent loser, it just needs to make less than it otherwise would on average. People invest in funds that under perform the market all the time. That describes the majority of the finance industry.