Direct Investing is best
It is a known fact that fund managers do not (on average) outperform the market. Infact with fund managers all investing in the same market it is logical that half will get above average returns and half will be below average.
The main service a managed fund can provide is a reduction in risk. They do this through diversification (through holding a large portfolio of stocks) or by investing in a lower risk portfolio of stocks (but consequently for a lower expected return).
For the privilege of investing with them you pay a management fee. No matter how small the fee (even 0.5% per year) it will add up over time.
Therefore investors with a long term view are better investing directly. An investor with 100K can construct a diverse portfolio of 20 stocks that will closely replicate a market index very cheaply with discount brokers and will have no ongoing fees.
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