Here's some good mutual fund news: a new study finds that fund fees in 2006 were the lowest in more than a quarter century.
A study going back to 1980 found that mutual fund fees and expenses haven't been lower than they were last year.
Fees declined again in 2006, continuing a multiyear trend, as ever-larger investor portfolios triggered reduced load fees and as funds continued to tamp down expenses to boost their competitiveness. Many growing portfolios had smaller fees taken out because their size enabled them to receive discounts on large purchases as well as fee waivers. Overall, it seems investors had much to cheer about in 2006.
The Investment Company Institute, the mutual fund trade group, found that investors in stock funds paid fees, including both loads and expense ratios, that averaged about 1.1 percent, a decline of .04 percent from 2005."
Fund fees are going down for two big reasons: 1) More money is being invested in funds. Fund operating costs do not go up proportionally with more assets under management, so rising assets should lower fees. 2) Investors are paying more attention to fund fees, and investing in lower cost funds.
The study is quiet about 12b-1 fees, which have been rising as a percentage of the total rake over the last two decades, as well as commissions to buy mutual funds at brokers, which have been jumping across the board in recent years. But it seems that more and more mutual fund investors are picking funds based on cost - and mutual fund companies, ever looking for ways to attract investor assets, are trying to give investors what they want. Let's give ourselves a round of applause.
2006 Was A Cheaper Year
Here's some good mutual fund news: a new study finds that fund fees in 2006 were the lowest in more than a quarter century.
A study going back to 1980 found that mutual fund fees and expenses haven't been lower than they were last year.
Fees declined again in 2006, continuing a multiyear trend, as ever-larger investor portfolios triggered reduced load fees and as funds continued to tamp down expenses to boost their competitiveness. Many growing portfolios had smaller fees taken out because their size enabled them to receive discounts on large purchases as well as fee waivers. Overall, it seems investors had much to cheer about in 2006.
The Investment Company Institute, the mutual fund trade group, found that investors in stock funds paid fees, including both loads and expense ratios, that averaged about 1.1 percent, a decline of .04 percent from 2005."
Fund fees are going down for two big reasons: 1) More money is being invested in funds. Fund operating costs do not go up proportionally with more assets under management, so rising assets should lower fees. 2) Investors are paying more attention to fund fees, and investing in lower cost funds.
The study is quiet about 12b-1 fees, which have been rising as a percentage of the total rake over the last two decades, as well as commissions to buy mutual funds at brokers, which have been jumping across the board in recent years. But it seems that more and more mutual fund investors are picking funds based on cost - and mutual fund companies, ever looking for ways to attract investor assets, are trying to give investors what they want. Let's give ourselves a round of applause.
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