Mutual funds can be one of the best deals out there according to most of the sites I read - MMM and JLCollins both recommend Vanguard's total stock market index fund and there are index bond funds and even REITs that have extremely low expenses. Sure, there are plenty of mutual funds that have high fees, but using a low fee index mutual fund means that you don't have to worry about checking stuff all the time - index funds as a whole tend to be lower cost and lower involvement for good returns. There are many investors that don't want to deal with the hassle of day trading or tracking ETFs... like me for instance. ;)
I think the terminology gets a bit muddled. When most people thing of "mutual funds" i suspect they are thinking of actively managed funds. Most people think of mutual funds that actively invest in stocks, but there are some that only invest in bonds, and many that invest in a mixture.
Index funds by design passively track a particular index, like the SP 500 or the DJIA or the total market. Good ones have *very* low fees, like the Vanguard 500 Index fund. But even here '
there-be-dragons'. I ran across an index fund where the broker charged a whopping 2%, all to do the exact same thing that Vanguard does for less than 0.1%.
Taken as a group, actively managed mutual funds don't do very well. Close to 80% fail to beat their respective benchmarks over a 5+ year timeline. There are of course exceptions - Lynch's Magellan fund (Fidelity) smashed the market for 13 years. Bt they are the exception, not the rule.
That's why there are so many strong proponents to passively managed index funds here, and why some people were advising against "[
actively managed] mutual funds".