Fund costs fall to quarter-century low

The cost of owning mutual fund shares fell to the lowest levels in more than a quarter century last year, according to research published today by the Investment Company Institute, the U.S. mutual fund industry’s main trade association. “The continuing decline in mutual fund fees and expenses is a direct result of investor preference for lower-cost funds and increased competition among fund companies,” ICI Senior Economist Sean Collins, the author of the report, said in a statement. “Fees are important to investors, and this study shows that they continue to pay close attention to them.” The study, “Fees and Expenses of Mutual Funds, 2006,” found that last year's decline in mutual fund fees and expenses continues a trend that has been in place since at least 1980, ICI said. The decline has been most pronounced among stock and bond funds, where average fees and expenses have dropped by more than 50%. The average fees and expenses of money market funds, which are lower than those of stock and bond funds, have fallen about 25% since 1980, ICI said. In 2006, stock fund investors on average paid 1.07%— or $1.07 for every $100 in assets invested—in fees and expenses, including loads, a drop of 0.04% from 2005, ICI said.