In his newest MarketWatch column, Chuck Jaffe gives his take on Payback Time, the new book by Phil Town, author of the best-selling Rule #1. Town's new book is something that fundsters should know about, given that its second chapter is entitled "Mutual Fund Investing Makes No Sense."

Town argues that investors pay too much for mutual funds and they don't beat the market.

"Town's points aren't wrong; they are just overblown and ignore some key considerations," Jaffe writes.

In the book, Town says the fund managers are "in the mutual fund business because it makes them rich without having to be talented" and goes on to show how, over time, up to 60 percent of returns will end up with the fund manager by way of expenses.

As for Town's argument that active management fails and that costs are killing performance, Jaffe writes that the argument "falters when moved from hypothesis into the real world." 

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