But wait! The average stock fund is up more than 25% the past five years, while the Standard & Poor's 500-stock index is virtually unchanged. Is there a ray of hope for humanity? Have people finally triumphed over machines?

Top index funds The five top-performing index funds: Total return* Fund, phone 2004 5 years Vanguard REIT Index, 800-662-7447 5.0% 72% Wells S&P REIT A, 800-282-1581 4.8% 69% Vanguard Emerging Market Index, 800-662-7447 8.0% 50% Vanguard Small Cap Growth Index, 800-662-7447 5.4% 36% Vanguard Small-Cap Value Index, 800-662-7447 4.3% 33% Average stock fund 3.6% 27% * Dividends, gains reinvested through Feb. 19 Source: Lipper

Unfortunately, no. That's why you should have at least part of your stock fund portfolio invested in index funds. But bear in mind, too, that not all index funds are alike — nor are all good investments.

Most funds invest the old-fashioned way: They hire managers who buy and sell stocks in the fund's portfolio. An index fund, however, boots the manager and simply tracks a stock index, such as the S&P 500. What are the advantages?

One is performance. If all fund managers are investing in the same pool of stocks, it stands to reason that the average fund will do no better than the market's average performance. After all, you wouldn't expect an average person to be taller than average. By choosing an index fund, you'll get average performance, which is better than 50% of all other funds.

But the second advantage — cost — tips the scale in favor of indexing. The average stock fund charges about 1.5 percentage points each year for management. So you could reasonably expect the average fund to return about the same as the stock market as a whole, minus 1.5 percentage points for expenses.

Index funds aren't managed, so they don't cost much to run. The Vanguard 500 Index fund, for example, charges just 0.18% per year to manage. That's enough of an edge to ensure that a low-cost index fund will beat the average fund over the long term.

So what is the record of man vs. machine in the mutual fund world? By one measure, managers look pretty good. The average stock fund has gained 27.3% the past five years. The S&P 500 is dead flat.

But there's less to this than meets the eye. The S&P 500 has gained 192% the past 10 years, assuming reinvested dividends, vs. 157% for the average fund.

More important, comparing the S&P 500 to the average stock fund is like comparing apples and hippos. The S&P 500 measures the performance of the largest U.S. stocks. But the average stock fund figure includes funds that invest in large, small and midsize companies. The average large-company stock fund has fallen 3.6% the past five years.

Not all index funds are created equal. Some index funds just don't make a much sense. Consider QQQ, an exchange-traded fund that tracks the Nasdaq 100. That index measures the performance of the 100 largest stocks traded on the Nasdaq stock exchange.

Logically, however, it doesn't make much sense to buy stocks simply because they are traded on the Nasdaq. Where a stock is traded doesn't really have anything to do with its prospects. There's no similar fund that buys the 100 largest stocks on the New York Stock Exchange. Why? Because that would be dumb.

Similarly, it makes little sense to buy an index fund with high annual expenses — like Scudder S&P 500 B, which charges 1.8% a year. An index fund with high expenses guarantees subpar performance.

And some index funds have not yet proved that they can beat their actively managed rivals. For example, the average international fund has gained 65% the past 10 years, vs. 49% for the Morgan Stanley Europe, Australasia and Far East Index. In large part, that's because many international fund managers were smart enough to avoid Japan's swooning market.

What kind of index fund should you choose? If you just want exposure to the stock market, buy a fund that tracks the broad-based Wilshire 5000 index or the Russell 3000. You'll get large and small stocks, all in one fund. Want big stocks only? Buy one that tracks the S&P 500.

You could create an entire portfolio of index funds, and there's nothing wrong with that. But if you still have some faith in humanity, consider keeping half your stock portfolio in an index fund. Use the rest for the actively managed funds. If your managers fail, you'll lag the index slightly. If your managers win, you might be able to buy that robot you've been eyeing.

John Waggoner is a personal finance columnist for USA TODAY. On Thursdays, he answers your questions in his Net Gains column, only at USATODAY.com. His Investing column appears Fridays. Click here for an index of Investing columns. His e-mail is jwaggoner@usatoday.com