Despite inflationary pressures, asset managers continue to lower fees

American Funds and Inspire Investing announce fee cuts Monday, in the wake of Vanguard's announcement Friday.

As inflation spreads across virtually every corner of the economy, the asset management industry is tossing investors a bone by engaging in another price war.

Capital Group, home of American Funds, was the latest asset manager to dial back prices, reducing fees on 18 mutual funds by revising the initial fee breakpoints.

The fund complex claims the fee cuts will result in the potential for over $20 million in savings for investors within the first year of the change.

“This is great to see,” said Todd Rosenbluth, head of research at ETF Trends.

“Unlike in the ETF universe, we have not seen asset managers regularly bring down the costs for mutual fund shareholders,” he said. “Advisers remain cost-conscious and have been gravitating toward ETFs and away from mutual funds in recent years. The moves by Capital Group could help them further retain shareholders.”

Of the 18 Capital Group funds cutting fees, 12 are in the fixed-income category, three are domestic equity funds, two are insurance series funds, and one is an emerging markets fund.

The Capital Group fee cuts, which took effect Sunday, coincided with an announcement by Inspire Investing, which is cutting the expense ratios on seven of its eight exchange-traded funds.

Inspire is a provider of biblically-based ESG ETFs.

“God has greatly blessed our work, and as our assets under management have grown over the years, we have passed on those savings to the shareholders of our ETFs,” Inspire chief executive officer Robert Netzly said in a statement.

According to the Inspire announcement, the fee change represents $568,000 in net savings for investors in the funds.

On Friday, Vanguard Group unveiled its latest expense ratio changes for six funds across multiple ETF and mutual fund share classes, which the asset manager said represent $8.8 million in aggregate net savings for investors.

“Vanguard has experienced strong inflows into its fixed-income ETFs in the past year and as per usual brings fees down on popular funds due to its unique ownership structure,” said Rosenbluth of ETF Trends. “Combined with prior fee reductions from [BlackRock’s] iShares, institutions have multiple low-cost products to consider to gain liquid, diversified access to the bond market.”

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