Question: Our investment committee is looking for the most recent industry research regarding trends in mutual fund fees paid by 401(k) participants. Can you provide any updates?
Answer: According to the most recent research from the Investment Company Institute, 401(k) plan participants have incurred substantially lower fees for holding mutual funds over the past 25 years. The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2024 shows that from 2000 to 2024, the average equity mutual fund expense ratio paid by 401(k) investors dropped by more than 50 basis points (66%), offering them potentially higher returns and balances in retirement. The average expense ratios that 401(k) plan participants incurred for investing in bond mutual funds fell by 69% during that same period. In addition, from 2008 to 2024, average target date fund expense ratios decreased by 57%.
