Fees have declined across the three major defined contribution mutual fund categories since 2008 at an average compound annual rate of 2.7%. Target-date fund fees, on an asset-weighted basis, have declined the most relative to active equity and active bond funds, falling about 4.6% annually.
Market forces, including the growth of passive investment alternatives, have played a role in managers lowering prospectus fees, but the inflow of assets, particularly to target-date funds, has also been a factor. Target-date assets, as estimated by the Investment Company Institute, have increased at a clip of 19.2% annually from 2008 to 2018, or to $1.1 trillion from $160 billion over the period. Active bond and equity funds have grown 9% and 8.8%, respectively, over the 10-year period.
