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Fund Spy

6 Medalist Funds Just Got Cheaper

When good funds' costs drop, you should pay attention.

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This article was originally published in the June 2017 issue of Morningstar FundInvestor. Download a complimentary copy of FundInvestor here.

The typical investor paid lower fund expenses in 2016 than ever before. The asset-weighted average expense ratio across funds (excluding money market funds and funds of funds) was 0.57% in 2016, down from 0.61% in 2015 and 0.68% five years ago, according to a report by Morningstar senior analyst Patricia Oey. This figure is the asset-weighted average across equity, fixed-income, balanced, and alternative funds, which include almost 24,000 share classes (load, institutional, retirement, other/no-load, and exchange-traded fund). This decline stems from investor demand for cheaper passive funds (index funds and ETFs) and strong flows into institutional share classes, which carry lower fees. Vanguard also contributed to average fee declines, as its low-cost passive funds continue to attract large flows.

Russel Kinnel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.