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As you point out most index funds have a very low 'expense ratio'- so there is little differentiation between them based on fees each charge. My personal performance benchmark is the S&P Index Fund (1yr & 2yr periods). I would limit my investing to S&P Index Fund if I did not have a better performing option available. The real benefit of a 'stock window' as part of a 401K plan is that it affords employee access to individual stocks rather than funds.

As for actively-managed mutual funds, (also ETFs and Target Date Funds) my criteria is that any option I would consider must have recently (i.e., 1yr & 2yr periods) outperformed the S&P 500 Index in terms of GROWTH in 'unit price'. My primary concern is amount of profit (or CAGR - compound annual growth rate) the fund returns to me - fees charged by fund's management is of secondary importance. Incidentally, this one criteria eliminates perhaps 90% of actively-managed mutual funds from consideration.

I apply two criteria as I 'cherry-pick' a few (i.e., 3-5 while still working) individual growth stocks for investment each year. (1) Business must be a 'great business' as espoused by the MF - many of my stocks were recommended by MF newsletters. and (2) My analysis indicates that stock price will likely double in value within 5 years (i.e., CAGR = 14%). Am not boasting but my portfolio has actually outperformed that growth rate over the past seven years since my retirement in 2013.

Final comment. (1) I would not invest in an annuity because I cannot determine what its payout might be say 20 years in the future. In effect, the soon-to-be retiree will likely be at the mercy of the insurance company in determining payout amount. (2) I would not invest in Target Date Funds - if you look at performance among its underlying funds there will be several low-performing 'dogs' among them. Again, I am not interested in any asset which has not recently outperformed the S&P 500 Index.
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