Fees continue to fall in the US
Fees charged for US mutual funds have declined in three of the past four years, according to the US investment watchdog.
However, fees are still significantly higher than those charged in the 1970s, says a report from the Securities and Exchange Commission (SEC).
While the SEC didn't reach a conclusion on whether or not fees are too high, it recommended investors receive more information on the actual cost of owning a mutual fund. It also suggested revisiting so-called 12b-1 fees, used to pay fund marketing and distribution expenses.
The study, by the SEC's investment management division, looked at fund operating expenses, sales commissions and 12b-1 fees.
The SEC says many mutual funds have reduced or eliminated up-front fees, which are not included in the expense ratio, while adding 12b-1 fees, which are included in the calculation. That change complicates comparisons of today's fund fees with those from earlier periods, the agency cautions in its report.
Overall, the SEC found fees tend to be lower for large funds, index funds, and funds that include a big chunk of tax-deferred retirement accounts, such as work-based 401(k) plans.
Bond funds typically have smaller fees than stock funds, the SEC reported, and international funds tend to be more expensive to own than those that invest domestically. In general, specialty funds tend to be more costly, the SEC added.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
