NAPA Net - Polling Places 051818

Are Fund Fees Falling?

Morningstar’s annual study of U.S. open-end mutual funds and exchange-traded funds found that 2016-2017 was the largest year-over-year decline in fees recorded since the firm began tracking the trend nearly two decades ago.

Meanwhile, the Investment Company Institute similarly finds that the average expense ratios of equity, hybrid and bond mutual funds — including both actively managed and index mutual funds in these asset classes — have trended downward for more than two decades.

But are you – and your plan sponsor clients – seeing that?

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* 1. Have you seen any particular trends in fund fees over the past couple of years?

No.

Mostly no.

Yes, fees have been trending lower.

Yes, fees have been trending higher.

Yes, fees on SOME funds have been trending higher.

Yes, fees on SOME funds have been trending lower.

Something else (please specify)

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* 2. Are your plan sponsor clients asking more about fund fees now than two years ago?

Yes.

Some are.

Not really.

No.

No - they always asked about fund fees.

Something else (please specify)

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* 3. Are you talking more about fund fees with plan sponsors now than two years ago?

Yes.

Yes, primarily because plan sponsors are more interested/asking about them.

Not really.

No.

No - I've always talked about fund fees.

Something else (please specify)

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* 4. Are you recommending passive options more these days?

Yes.

Yes, primarily because plan sponsors are more interested/asking about them.

Not really.

No.

No - I've always been inclined to recommend passive fund options, when appropriate.

Something else (please specify)

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* 5. When designing a core fund lineup, is style purity of the assets classes a strong factor (ie. small cap value, small cap growth) or do you prefer to let the fund managers "drift" based on where they see the market going?

Yes, it's a strong factor.

I'm inclined to let the fund managers "drift"

Depends on the fund/class.

Depends on the fund manager.

Haven't given it much thought.

It's a factor, but not a strong one.

Something else (please specify)

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* 6. Speaking of passive shifts, an increasing reliance on indexed funds may be contributing to lower fees for target-date funds. Morningstar notes that fees for target-date funds continued their multiyear downward trend in 2017, and that the average asset-weighted expense ratio fell to 0.66% at the end of 2017, a notable decrease from 0.91% just five years earlier. Are you seeing a downward trend in TDF fees?

Yes.

Not really.

Not among the TDFs I recommend.

Yes, among some.

Something else (please specify)

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* 7. Other comments about fund fees, trends in fund fees, conversations about fund fees, asset class style purity, fund manager "drift", or life in general?

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* 8. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Other (please specify)

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* 9. What size plans do you PRIMARILY work with?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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* 10. Suggestions for future survey questions?

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* 11. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response, you can leave your email below...