Equity fund investors have paid 11% more in fees, all the while their investments have fallen during the bear market, according to a report by the General Accounting Office expected to be released at todays Congressional hearing on the fund industry.
The 46 largest stock funds charged an average 70 basis-point fee in 2001, up from 63 basis points in 1999, according to the report that the GAO released early to leading publications, including USA Today and The Wall Street Journal.
Rep. Michael G. Oxley, chairman of the House Finance Committee, requested the study, which originally was not scheduled to be released until April 15. Its findings, as well as testimony by Jack Bogle, former chairman and founder of Vanguard, and Investment Company Institute officials, are expected to heat up todays Capital Markets Subcommittee hearing.
Oxley maintains that fees are impossible for investors to discern in fund prospectuses and that most are even unaware that firms automatically deduct them from their assets.
"Fund costs are far too high," Bogle told WSJ matter-of-factly. He estimates that all told, loads and indirect charges included, investors pay 3% a year in fees. Fund critics told MFMN that loads and trading costs cost investors 5% or more a year (see MFMN 12/2/02).
Mutual Fund Market News will be reporting live from todays hearing. Stay tuned.