Here's an excerpt:
The consequences for employees can be immense. From 2011 through mid-2016, the lawsuit says, a $1-billion investment in Fidelity’s Overseas fund would have grown to $1.57 billion. The same investment in GE’s International Fund, 90% of which was owned by GE’s 401(k), grew to only $1.22 billion, a relative shortfall of more than $300 million. Fidelity’s fund wasn’t offered to GE workers. A five year cumulative return of 57%, vs. a five year cumulative return of 22%.
That's *huge*.
If it were a passive fund, it's kinda hard for a passive fund to underperform the index that badly.
And GE Asset Management was sold by the Greedy Executives to State Street:
GE profited from this arrangement in two ways, according to the lawsuit. The company pocketed the investment management fees paid by its own employees, and it exploited its employees as a customer base for the funds — the 401(k) plan accounted for more than 70% of the ownership of all five funds and 90% of one, an international equity fund. The value that ownership gave the funds contributed to the $485 million GE pocketed when it sold its investment subsidiary, GE Asset Management, to State Street in mid-2016, the lawsuit implies.
So it was basically the GE Company store, run for the benefit of management, at the expense of employees.
Passive = index lol - its passive vs non-passive. Fees do NOT make up a 30% difference in a few years. You are talking 1-3% in 5 years time. Relative performance in an international fund can generate that wide of a discrepancy. For example - invest in Asia and Euro grows faster? Underperform. Opposite is true. Throw in markets like Brazil, China, large cap small cap etc and the variation on international funds is MASSIVE.