The expenses that 401(k) plan participants incurred for investing in long-term mutual funds — which include equity, bond and hybrid funds — declined in 2012, consistent with the downward trend of the past decade and a half, according to a just-released report by the Investment Company Institute.
The report, The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2012, found that plan participants holding mutual funds tend to invest in lower-cost funds. In 2012, the average expense ratio on equity funds offered for sale in the United States was 1.4 percent.
401(k) plan participants who invested in equity mutual funds paid less than half that amount, 0.63 percent, the study found. Expenses paid by 401(k) investors were also lower than the asset-weighted average expenses for all equity fund investors (0.77 percent).
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