Plan Sponsors Ask…

Question: We have worked very diligently with our plan advisor to create a comprehensive plan investment lineup that offers diverse, institutionally priced funds to our employees. Has there been any noticeable trend in mutual fund expense ratios over the years?

Answer: Updated research released last March from the Investment Company Institute (ICI) details just how far fees and expense ratios have fallen over the past 25 years. For example, the institute found that equity mutual fund expense ratios averaged 0.47% in 2021, compared with 1.04% in 1996; bond mutual fund expense ratios averaged 0.84% in 1996 and fell to 0.39% in 2021. ICI’s report also shows that in 2021, the average expense ratio of actively managed equity mutual funds was 0.68%, down from 1.08% in 1996. Average index equity mutual fund expense ratios were 0.06%, compared with 0.27% in 1996.

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