Fama and French have a new paper out on the ability of stock fund managers to outpredict the market. Short answer: no. In their words, 'we cannot reject the hypothesis that no fund managers have skill that enhances expected returns', even after adding back their explicit costs.
Alfred Cowels came out with a paper on stock market professional predictive ability back in 1933. His paper was titled 'Can Stock Market Forecasters Forecast?' His conclusion then: "It is doubtful". It is one of the seminal works of the Efficient Markets Hypothesis.
Active fund managers are still way more popular than passive funds. At least, fund manager commissions no longer have a 8.5% load as they did until the 1970's. Index funds really took off in the 1980's, but still only have about 20% of the market. It is interesting that after such a long, consistent documentation of the failure of mutual fund managers, most people prefer to pay extra to add the idiosyncratic risk of the fund to their equity allocation.