An Investment Company Institute (ICI) report has determined that average expense ratios of equity and bond mutual funds continued to decline last year.
“The continued decline in average equity and bond mutual fund expense ratios partly reflects the demand for no-load funds,” ICI Senior Director of Industry and Financial Analysis Shelly Antoniewicz said. “Gross sales of no-load funds without 12b-1 fees have nearly doubled since 2000 and now make up the vast majority of long-term mutual fund gross sales.”
The Trends in the Expenses and Fees of Funds, 2022 analysis showed the average expense ratio for equity mutual funds declined 3 basis points to 0.44 percent in 2022, while the average expense ratio for bond mutual funds decreased 2 basis points to 0.37 percent.
According to ICI, the findings are sourced from more mutual fund investors paying for advice and assistance directly out of pocket rather than indirectly through 12b-1 fees, as well as the widespread use of retirement accounts, which often invest in institutional no-load share classes.
Investor interest in lower-cost mutual funds has also aided the decline in average expense ratios for actively managed and index equity mutual funds. Last year, the average expense ratio for actively managed equity mutual funds declined 2 basis points to 0.66 percent, and the average expense ratio for index equity mutual funds decreased 1 basis point to 0.05 percent.