Mutual Fund Fees at Lowest Level in 25 Years: ICI

The Investment Company Institute released a report Tuesday indicating that mutual fund fees are at their lowest levels in 25 years, a result of investors’ increased appetite for low-cost funds and greater competition among mutual funds.

“Fees are important to investors, and this study shows that they continue to pay close attention to them,” said ICI senior economic Sean Collins.

Fund fees have been decreasing since 1980, the ICI said, the greatest among stock and bond funds, whose fees have decreased by more than 50%. Fees for money market funds have decreased about 25% in the period.

In 2006, equity fund investors paid an average of 107 basis points in fees and expenses, down four basis points from 103 basis points in 2005. Bond fund investors paid an average of 83 basis points last year, down five basis points from the year before, and money market fund investors paid an average of 40 basis points, a two-basis-point decline.

The ICI also found that 90% of the assets held in stock funds are in those with below-average expense ratios.

The decline in fees and expenses on stock funds also owed in large part, the ICI said, to lower loads that investors paid last year. While the average maximum sales load in 2006 was 5.28%, discounts on large purchases and waivers on purchases through 401(k) plans brought the actual average that investors paid to only 1.31%.