Vanguard maintains its position as the low-cost leader among U.S. money managers with an asset-weighted average fund fee of 10 basis points, followed by State Street at 16 basis points. Fidelity’s fees fell by 10% to 53 basis points, in a new Morningstar study. This decline was mostly attributed to performance-related fees that adjust annually. The manager also started about 80 new low-cost share classes over the past two years, which added to the overall fee decline, but Fidelity did reduce fees on 14 index funds that were not reflected in the study.
Investors moved to cheaper funds from more expensive ones on in both the active and passive arenas. The asset-weighted average passive fee was 0.15% vs. the average equal-weighted fee of 0.3%. The asset-weighted fee fell 7% from 2016 compared to the equal-weighted fee decline of 3%. Active management fees averaged 0.72% and 0.85%, asset-weighted and equal-weighted, respectively. The asset-weighted figure declined 4% from 2016, while the equal-weighted fee fell 2%.
Investors paid an average 52 basis points in 2017, an 8% decline from 2016. Morningstar also noted in its most recent U.S. Fund Fee Study, that manager fee reductions saved investors about $4 billion in 2017 compared to 2016.