Why is it in up markets fund managers are high beta, but in down markets sharpe ratios turn negative and then fees cause excess loss beyond ETFs? Does active management work when paying such high fees?

It admittedly depends on whether it is a well-managed fund or not. Some well-managed funds may be high in beta when the market is up, but it will protect downside well, thereby giving you a good and well-protected return at the end of the day. What’s more important is looking at the long-term returns over different cycles of markets. It is impossible to make money at every single type of market environment but if a fund manager makes more right calls than wrong ones, you will be able to observe long-term good sharp ratios.