As for index ETFs outperforming index funds, that somewhat confusing paragraph is actually comparing index ETFs to the raw index (a theoretical entity). In a perfect world, index ETFs would match their underlying index, less fees, but in the real world they're not perfectly efficient due to periodic changes in the index and fluctuating numbers of units outstanding. The theoretical index makes changes instantaneously but the fund sponsor has to go to the market when attempting to fulfill their mandate of replicating it or issuing new units. When changes are announced in advance, there is an opportunity for arbitrageurs to trade on the change in demand of securities that are either being added or dropped from said index. The arbitrageurs profit at the expense of ETF unitholders, Smaller funds that track lesser known indices are especially vulnerable to this problem.

For more info see: https://www.bu.edu/rbfl/files/2013/09/Issue2McLaughlin.pdf