U.S. Fund Fee Study: Average Fund Fees Paid by Investors Decreased 8% in 2017, the Largest One-Year Decline Ever

Morningstar

Patricia Oey

Research

12 Pages

Morningstar analyzes long-term trends in U.S. mutual fund and ETF fees, highlighting how investor behavior and industry competition are steadily pushing costs lower. The paper shows investors now pay 0.48% on average, roughly half of 2000 levels, while capital continues concentrating in the cheapest funds.

Key Takeaways

Fees Keep Falling: Asset-weighted fees declined to 0.48% in 2018 from 0.51% in 2017, marking a 6% drop and continuing an unbroken downward trend since 2000.
Passive Cost Advantage: Passive funds averaged 0.15% versus 0.67% for active funds, meaning investors paid roughly 4.5x more for active management in 2018.
Flows Follow Costs: The cheapest 20% of funds attracted $605 billion in inflows while the remaining 80% saw $478 billion in outflows, reinforcing a strong cost-driven allocation shift.
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