Fund Fees Are Falling

Investing in equity and hybrid mutual funds through 401(k) plans became cheaper in 2018 according to a new report from the Investment Company Institute, a trade group for the fund industry. This is part of a longer-term trend; the fees investors have been paying have dropped significantly since 2000.

At the end of last year, mutual funds represented 63 percent of the $5.2 trillion in 401(k) plan assets. Plan participants incurred an average expense ratio of 0.41 percent for equity mutual funds in 2018, which is down from 0.45 percent in 2017 and  down from 0.77 percent in 2000 — a 47 percent decline.

The average expense ratio that 401(k) plan participants incurred for investing in hybrid mutual funds fell to 0.49 percent in 2018, down from 0.51 percent in 2017 and 0.72 percent in 2000. Bond mutual fund investors, on the other hand, saw their average expense ratio hold steady at 0.34 percent between 2017 and 2018, although they're down from 0.6 percent in 2000.