Investors Saved Nearly $6 Billion in Mutual Fund Fees in 2019

401k, retirement, Morningstar, fees, funds, expense ratios

More good news.

Research behemoth Morningstar found the average mutual fund expense ratio dropped from 0.48% to 0.45% in 2019.

This seemingly small fraction is actually a 6% year-over-year decline, and the third-largest on record dating back to 1991, which saved investors nearly $6 billion in fund fees in 2019.

“Investors are increasingly aware of the importance of minimizing investment costs, which has led them towards lower-cost funds and share classes,” Ben Johnson, Morningstar’s director of ETF and passive strategies research, said in a statement. “There has also been intensifying competition among asset managers, who have cut fees to appeal to cost-conscious investors.

Another factor, according to Johnson, has been changes in the way financial advice is delivered and paid. As advisors move away from transaction-driven compensation models and toward fee-based models, fund share classes that have fewer embedded advice or distribution costs are seeing more flows.

Important findings

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