The mutual fund industry’s trade group says 401(k) expense ratios have declined considerably over the past decade and a half.
According to a new report from the Investment Company Institute (ICI), the expense ratios that 401(k) plan participants incur for investing in mutual funds have declined substantially since 2000, when the report claims that 401(k) plan participants incurred an average expense ratio of 0.77% for investing in equity funds.
By 2014, that figure had slipped to 0.54%, a 30% decline. The ICI also said that the expenses that 401(k) plan participants incurred for investing in hybrid and bond funds also fell from 2000 to 2014, by 24% and 28%, respectively.
Indeed, the 0.54% asset-weighted average was less than half the 1.33% simple average for all equity funds — and lower than the industrywide asset-weighted average of 0.70%, according to ICI.
Those expense ratios also dropped between 2013 and 2014; the average expense ratio that 401(k) plan participants incurred for investing in equity mutual funds fell from 0.58% in 2013 to 0.54% in 2014, and the average expense ratio that 401(k) plan participants incurred for investing in hybrid funds fell from 0.57% in 2013 to 0.55% in 2014. The average expense ratio that 401(k) plan participants incurred for investing in bond mutual funds fell from 0.48% in 2013 to 0.43% in 2014.
