Participants in 401(k) plans paid an average expense ratio of 74 basis points for investments in mutual stock funds in 2006, compared with an industrywide asset-weighted average of 88 bps, according to a research paper released today by the Investment Company Institute.
In addition, 77% of 401(k) investments in mutual stock funds had expense ratios of less than 1% in 2006, while 23% of the investments in mutual stock funds had expense ratios of less than 50 bps. 401(k) bond fund investors paid an average expense ratio of 56 bps at the end of 2006, and 43 bps for money market funds.
The paper said that 55% of the $2.7 trillion in total 401(k) assets was invested in mutual funds in 2006. In addition, according to the study, 88% of the $1.5 trillion in 401(k) assets in mutual funds in 2006 was invested in stock funds, while 7% was invested in bond funds, and the remaining 5% in money market funds.
