Aside from costs, index funds may have outperformed because their share of the overtall pie has risen. If you consider an index fund to be an asset on its own,

Aside from costs, index funds may have outperformed because their share of the overtall pie has risen. If you consider an index fund to be an asset on its own, the price of that asset rises as more people invest in it. As a result, equities that are underrepresented in indices decrease on average, while those that are overrepresented - increase. We see evidence of this in the fact that equities tend to fall shortly after being removed from key indexes. So index funds outperform because their share increases, and their share increases because they outperform. Classic bubble equation.