Average equity mutual funds fees paid by 401(k) participants dropped to 54 basis points in 2014, down four basis points from 2013, said a report by Investment Company Institute released Wednesday.
In comparison, the average fee for all equity mutual funds offered in the U.S. was 133 basis points in 2014.
“The data underscore the significant trend of declining mutual fund fees in 401(k) plans since 2000,” said Sean Collins, senior director of industry and financial analysis at ICI, in a news release on the results.
In 2000, the average fee for equity mutual funds held in 401(k) accounts was 77 basis points. Likewise, average fees for hybrid funds — which combine equity and fixed-income components — and bond funds also have fallen since 2000.
The average fees for hybrid and bond funds dropped to 55 basis points and 43 basis points in 2014, respectively, down from 57 basis points and 48 basis points in 2013 and 72 basis points and 60 basis points in 2000. Data provided in the report are based on average asset-weighted expenses.
The report further found that mutual funds accounted for about 63% of total 401(k) assets at the end of 2014, or roughly $2.9 trillion. Of that total, equity funds accounted for 60% of mutual fund assets; hybrid funds, 25%; bond funds, 11%; and the rest in money market funds.
“In this competitive market, funds are striving to provide not only better services, but also lower prices, to the benefit of mutual fund investors saving for retirement in 401(k) plans,” Mr. Collins said in the news release.
Economies of scale and “cost- and performance-conscious” decision-making by 401(k) plan executives and participants have also contributed to lower fees, the report said.
