Why Some Already High-Cost Funds Are Looking Even Pricier
With average fees falling, more funds should cut theirs, but too often they aren't.
With average fees falling, more funds should cut theirs, but too often they aren't.
My colleague Patricia Oey wrote a Fund Spy in May that summarized the latest Morningstar fee study for U.S. open-end mutual funds and exchange-traded funds. Two conclusions from the study should jump out at fund company executives.
First, the weighted-average fee that investors pay continues to fall, from 0.65% in 2013 to 0.57% in 2016. Second, investors continue to pull money from expensive funds (typically actively managed) and plow it into the cheapest funds, which are often passively managed. But even the weighted-average fee for active U.S. equity funds dropped to 0.77% from 0.83% during the same stretch.
Kevin McDevitt does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.