Index ETF fees falling faster than indexed mutual funds
Fees for indexed exchange-traded funds fell 27% between 2016 and 2019 to an average 30 basis points, while those of their mutual fund counterparts fell 19% to 26 basis points. Research from London-based Fitz Partners said that industrywide pressure on asset management fees is impacting not just active managers. "In our industry, when we describe fee reduction, it is often assumed that active fund products are those under most pressure but our latest fee data show that index trackers have also been following the same trend," CEO Hugues Gillibert noted Friday in a news release. "More interestingly, this drop in fees has occurred independent to whether the passive strategies are offered through ETFs or mutual funds' clean (no-load, retail) classes."
Regionally, U.S.-focused funds had the narrowest gap in fees. The average index U.S. equity indexed mutual funds charged investors only 1 basis point more than a comparable ETF. That gap widened to 13 basis points for emerging market ETFs over their mutual fund counterparts.