Many fund executives have been bracing for tremendous downward pressure on fees, but that is unlikely to happen, largely because of investors general lack of concern when it comes to fees, according to a Financial Times editorial.
Early on in the fund scandal, however, t certainly seemed as if the industry would face both market and regulatory pressures to decrease fees. The $1 billion in fee reductions that New York Attorney General Eliot Spitzer negotiated in his settlements with mutual fund companies was expected to put competitive pressure on other fund companies to also decrease their fees. Fund executives also thought that investors would become more sensitive to fees, with all the attention that the scandal and subsequent reforms were drawing to fees.
While there has been a modest downturn in fees, most fund executives dont expect that to continue. Investors, it seems, are more concerned with performance than they are with fees, and the pressure on fees will blow over long before regulators turn their attention to the next crisis.