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INVESTING/PORTFOLIO STRATEGIES

ICI: Mutual fund fees continue to decline for 401(k) plans

Expense ratios for equity mutual funds in 401(k) plans declined again in 2016, falling to 48 basis points from 51 basis points in 2015, according to a survey by the Investment Company Institute.

This average asset-weighted expense ratio of equity mutual funds in 401(k) plans has fallen almost steadily from the 83 basis points reported in 2003, according to the survey published Thursday.

“Our analysis of the fees that 401(k) plan participants pay to invest in mutual funds shows the continuation of an impressive trend of declining expense ratios since 2000,” Sean Collins, ICI's senior director of industry and financial analysis, said in a news release. The declining costs “is driven by competition among funds and investors' keen awareness of fees, among other factors.”

Expense ratios for bond mutual funds and hybrid funds — a mixture of stock and bond investments — also fell last year.

For bond mutual funds, the average asset-weighted expense ratio fell to 35 basis points last year from 38 basis points in 2015. The annual expense ratio has declined almost steadily from the 61 basis points in 2003.

For hybrid mutual funds, the average asset-weighted expense ratio declined to 53 basis points last year from 54 basis points in 2015. The expense ratio has declined almost steadily from 73 basis points in 2003.

The data for the ICI analysis excludes mutual funds available as investment choices in variable annuities, tax-exempt mutual funds and mutual funds that invest primarily in other mutual funds.

The ICI analysis is based on data from ICI, Morningstar and Lipper.