This sounds right. Here's my thinking... There are a bunch of possible outcomes, ranging from terrible to terrific. The distribution of outcomes (given current information) is priced into today's prices; and so purely rational investors would break even in expectation in terms of real (i.e., inflation-adjusted) return. But obviously, the actual outcome can (and almost always does) differ from expected outcome. By investing in index funds, perhaps we're betting / hoping that the very worst-case tail outcomes won't occur, and thus relying on the conditional outcome distribution (conditioned on the worst cases not happening) is slightly more favorable than the unconditioned distribution.

In other words, you have to an optimist to invest in index funds. But you only have to be very slightly optimistic (and consequently, only very slightly irrational). The bet we're taking is that the absolute worst outcomes won't occur. This seems a much safer bet than most active investors (and real estate investors) make.

But then there is also the wrinkle that this is not a one-shot game. It's a repeated game, and investors enter and exit the game at different times with different objectives and constraints. So "future returns" is a fuzzy term because it's ambiguous about when exactly the "future" is. You could have a distribution over all time points, but different investors would weight the different time points differently due to their individual schedules (when do start earning, when do they retire, etc.).