Equity funds keep getting cheaper.

That's the finding of a new Investment Company Institute study, which reports a decline of 3 basis points in the average expense ratio that investors paid for equity funds in 2013 from 2012, to 0.74%.

The study, Trends in the Expenses and Fees of Mutual Funds, 2013, reports a fourth straight year of declines in such expenses, following an increase of 4 basis points in 2009 after the 2008 financial crisis.

"Appreciably lower expense ratios paid by investors for equity mutual funds in 2013 reflect the strongly competitive nature of the fund industry, as well as gains in equity fund assets, which, through economies of scale, helped lower fund expense ratios," said Sean Collins, ICI's senior director of industry and financial analysis, in a statement. "This study also shows that the average expenses of both actively managed funds and index equity funds have been trending downward for more than a decade."

The ICI study also reported that:

  • Assets in equity funds jumped from $5.94 trillion in 2012 to $7.76 trillion in 2013.
  • The average expense ratio of bond funds remained unchanged, at 61 basis points.
  • The average expense ratio of hybrid funds rose by 1 basis point in 2013, to 80 basis points.

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