Equity mutual fund expenses continued falling, reaching an average 74 basis points in 2013, down three basis points from 2012, according to a report by the Investment Company Institute.
Average asset-weighted equity mutual fund expenses have been falling steadily since the 87-basis-point total in 2009, the report said. Bond mutual fund expenses were flat at 61 basis points in 2013, but were down three basis points from 2009.
The decline in equity mutual fund expenses have been “part of a long secular trend that seems to be continuing,” said Sean Collins, senior director of industry and financial analysis, in an interview.
An increase in the popularity of index mutual funds has played a role in the aggregate decline of average equity mutual fund expenses, and so has competition among mutual fund providers, Mr. Collins added.
Index mutual fund assets reached $1.74 trillion last year, up from $1.31 trillion in 2012 and more than double the $836 billion in 2009. The ICI index mutual fund data include equity, bond and hybrid — a mixture of equity and bond — funds.
Target-date mutual fund assets climbed to $618 billion last year, up from $481 billion in 2012 and more than double the $256 billion in 2009. Average asset-weighted expenses for target-date mutual funds were 58 basis points last year, the same as in 2012 but nine basis points lower than 2009.
Equity mutual funds fees vary according to investment class, the ICI report said. Last year, for example, equity growth funds had an average weighted expense of 85 basis points vs. 50 basis points for equity blend funds and 108 basis points for emerging markets equity funds.
The ICI annual report includes information on mutual funds used in retirement accounts as well as in taxable accounts but does not distinguish between the two. It also does not differentiate expenses for retail mutual funds vs. institutional-share funds.