I had not heard about this paper...thanks for the tip. It provides nice empirical support for what Jack Bogle has been saying all along about ETFs (though interestingly, it extends to index funds as well). He uses the analogy of a shotgun: it can be a powerful tool in the right hands, but you can also blow your head off with it. I think passive funds (both mutual funds and ETFs) are great tools, but perhaps there is room for professional guidance even when using these fairly basic investment vehicles.