Investor expenses have dropped for a second straight year, the Los Angeles Times reports.
Investors paid about 6% less for stock funds in 2005 than in 2004, with expenses averaging 0.93%, compared to 0.99%, according to data from Chicago fund tracker Morningstar. Expenses for funds comprised of non-U.S. assets likewise fell 6% to 1.10%, compared to 1.1.7% in 2004.
Morningstar Director of Fund Research Russell Kinnel credited the continued expense shaving to New York State Attorney General Eliot Spitzer, who spearheaded a series of investigations into fund industry sales and trading practices in 2003.
"Spitzer has focused a lot of board attention to fees, and many companies are responding to that," Kinnel said.
The surge in popularity of exchange-traded funds also contributed. ETFs, which can be traded throughout the day like stocks, typically track indexes, and maintain low fees. Since 2000, ETF assets have increased four-fold to $312.8 billion, according to statistics from the Investment Company Institute, the Washington-based fund industry trade group.
In 2005, Boston-based Fidelity cut expenses on five of its index-linked Spartan funds by 30%. A year ago, the nation's largest fund company also made its target-date Freedom Funds a little freer by zapping the 0.08% management fees.
"Broadly, we're making the moves to ensure that our high-quality product offerings are even more compelling to investors and position ourselves more aggressively in the market," said Fidelity spokesman Scott Beyerl.
The average expenses at Valley Forge, Pa.-based Vanguard, the nation's second-largest fund shop, also decreased fro 0.23% in 2004 to 0.21% in 2005.
A study form the ICI showed that investors are increasingly concerned about fees, with 74% more wanting to know about fees before investing, compared to 40% who want to know about investment strategies and only 25% who paid attention to managers.
"We're seeing the increasing power of fees as criterion for investment selection," said Mercer Bullard, founder of Oxford, Miss.-based investor rights group Fund Democracy.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.