I'm pretty sure the S&P was up about 3.3% in the 4th quarter so your return looks fine.
Vanguard vfinx was at 3.8% for the 4th quarter of 2016. I'd double check your husband's numbers again.
I have Trowe 401k through my job and I've been pleased with the Index Options - they aren't perfect, but they are low fee and seem to be tracking the market correctly. I also have had a bit in a TR target date fund (2045) because it was my only option when I first signed up for the 401k - the allocations there also seem solid (80% US stock, 10% international stock and 10% between bonds/cash etc) and while the fees are higher than an index fund, they are still well under 1%. Though I've since moved my contributions into the index fund, I did keep the past amounts in the target fund.