Asset-Weighted Expense Ratio Drops Again


Released on June 8th, an annual study examining trends in open-end mutual funds and exchange-trade funds found that the asset-weighted average expense ratio plummeted to 0.45% in 2019, slicing funds and ETFs nearly in half over the last two decades. The 6% year-over-year drop is the third greatest recorded dating back to 1991, Morningstar observed. The majority of flows into these low-cost funds has been funneled into index mutual funds and exchange-traded funds, driven by a multitude of factors including the fluctuations in the financial advice industry, shifting investor preferences, and the climb of TDFs as the default investment choice in retirement plans.

Generally, investors saved approximately $6 billion in fund fees last year. “Investors are increasingly aware of the importance of minimizing investment costs, which has led them towards lower-cost funds and share classes,” says Ben Johnson, Morningstar’s director of ETF and passive strategies research, and coauthor of the report. “There has also been intensifying competition among asset managers, who have cut fees to appeal to cost-conscious investors.”

To read more of the 2019 U.S. Fund Fee Study, click here.

If you are a fiduciary that manages an employee benefit plan for your company, you can face personal exposure to claims alleging breach of fiduciary duty. Colonial Surety Company provides fiduciary liability insurance for plan administrators.  Fiduciaries are defended and indemnified from covered plan participant lawsuits with fiduciary liability insurance, and valuable company data and information of the plan and company are protected with cyber liability insurance—all found in our ERISA bond packages.  Cyber liability insurance protects the pension and the business from cyber breaches. Fully protect your plan, yourself, and your company all in one place, instantly online. Contact us today to get your coverage online, instantly. Contact us today to obtain your ERISA fidelity bond package today.