In a recent article Levy and Saranat, hereafter referred to as SL [6], raise the question of reconciling the phenomenal growth of mutual funds with the equally phenomenal evidence, produced by the studies of Jensen [5] and Treynor and Mazuy [11], to cite a few, that their risk return performance has not been superior to that of the unmanaged portfolios. SL attribute this paradoxical situation to comparison of mutual funds' performance against that of a highly diversified Standard and Poors Index of 500 stocks rather than to some alternative attainable by most investors. SL argue that this kind of comparison, and the conclusion based on it, is not relevant since the alternative of attaining the degree of diversification implicit in the 500-index is not attainable by most small investors with their limited resources. But then the conclusion that mutual funds offer a better alternative, and hence their phenomenal growth, based solely on the comparison of performance of eight arbitrarily selected mutual funds against the performance of eight arbitrarily chosen stocks is hardly valid either. We concede that the performance of mutual funds be considered against that of the alternative attainable by most individual investors, and, following this line of thought, we evaluate the risk-return performance of several alternatives, all easily attainable by the average individual investor. The alternatives evaluated in this study are the following: (a) investment in Growth and Price Appreciation portfolios recommended by the Standard and Poor's (b) investment in Safety and Income Portfolios recommended by the Standard and Poor's (c) investment in the stocks comprised in the Dow Jones Index (d) investment in mutual funds.Transaction costs are taken into account in computing the comparative risk return variates from different alternatives with realistic limitations on the investment resources and the corresponding diversification levels. The method used to compare the risk return obtainable from different sources is simulation to be described in the next section.