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https://morningstar.com/funds/4-fund-fee-trends-watch-2025Keep an eye on the growth of once-novel investment strategies and the industry’s push into higher-cost areas. Investors should continue seeking low-cost funds and avoid paying unnecessarily high fees for complicated products. Some higher-cost funds and ETFs may prove beneficial for investors, but any benefit should match the higher cost.
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I wonder if fees become less significant with age? Yes, at 35 years of age with 30 years until one begins pulling IRA distributions a tenth or quarter of a point is a big deal due to the long term compounding. No argument. But for a 75 or 80 year old picking a fund (often hybrid types designed to hedge risk) I’m not so sure fees are a big deal. OTHO if that 75 year old is investing only in short term credit or cash, I suppose a quarter point is still a big deal.
Thank you Jack Bogle and Vanguard!
Some investment firms are now "gently nudging" investors towards private equity,
private debt, and interval funds mostly to increase their profits.
I agree that fund fees become less important with age for the reasons stated.
Investors have been moving to index funds which cost less to run. Investors have been moving to cheaper funds generally, even active funds. Advisors of wrap accounts (including robo-advisors) may be pushing clients into lower cost funds to make their "all in" prices (including wrap fees) look more reasonable (my speculation). Each of these has the effect of reducing asset-weighted fees even if no fund fees change.
Funds whose fees are keyed to AUM may be seeing their fees drop "passively" because of growing assets. This is related to but different from investors moving to lower cost funds (thus increasing those funds' AUMs).
Lots of moving parts.
Give Bogle credit for holding down fees on actively managed funds. Something other funds families have not followed, or at best followed just to a small extent. For example, VAIGX is managed by exclusively by Baillie Gifford with an ER of 0.40%, while Baillie Gifford charges double, 0.81%, for its own version BTLSX. And then there are the Primecap-run funds, which cost less under Vanguard than under Odyssey.
Good observations.
I think it's a combination of both factors noted above.
Following info is from M* 2024 US Fund Fee Study Executive Summary (link in OP).
In 2024, the average expense ratio paid by fund investors was less than half of what it was two decades ago.
Between 2005 and 2024, the asset-weighted average fee fell to 0.34% from 0.83%.
Investors have saved billions in fund fees as a result.
Three factors played a role in lowering fees:
• Investors are increasingly aware of the importance of minimizing investment costs,
which has led them to favor lower-cost funds.
• Competition among asset managers has led many to cut fees.
• Evolution in the economics of advice has also played a central role.
The move toward fee-based models of charging for financial advice has been a key driver
of the shift toward lower-cost funds, share classes, and fund types—most notably exchange-traded funds.
Fund fees are not falling as fast as they used to, though.
Two factors are behind this slowing rate of change:
• Fees of prominent index mutual funds and ETFs are approaching a floor,
with many already charging less than 0.05%.
• The emergence of active and alternative ETFs contributed to higher-priced fund launches
than previously observed.