downward trending chart Moneymanagers who depend on actively managed funds are already feelingthe financial pinch, with more pressure on the way. (Photo:Getty)

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Fidelity Investments may have led the way with no-fee indexfunds this past summer, but the battle forinvestors' wallets hasn't stopped there.

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According to a Reuters report, investors could be saving“billions” every year as money managers keep cutting fees in an effortto keep customers—and gain new ones.

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In fact, says the report, “Some analysts see a future withnegative fee index funds, where investors get paid a small amountfor investing money.”

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The report cites Morningstar analyst Ben Johnson saying that thefee cuts are a democratizing force for small investors. “Mom andpop are getting what large institutions get,” he's quotedsaying.

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Index funds have seen the biggest cuts, but now bigcuts could also hit actively managed stock and bond funds.

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The latter two funds have hung onto relatively high expenseratios even as investors turned to cheaper options such as indexand exchange-traded funds.

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And money managers who depend on actively managedfunds are already feeling the financial pinch, with more pressureon the way.

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“It is inevitable that active management sees this reality ofinvestors going to lower cost products,” Todd Rosenbluth, directorof ETF and mutual fund research at CFRA, is quoted saying in thereport. Rosenbluth adds, “They will bring down pricing to beingonly modestly above index funds versus being significantlyhigher.”

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And that can add up, even if it's only hundredths of apoint.

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According to the report, investors saved about $4 billion in2017 on a U.S. fund asset base of more than $22 trillion with anoverall drop in asset-weighted fund fees to 0.52 percent from 0.56percent. Says the report, “The 8 percent annual decline was thebiggest since research firm Morningstar Inc, started tracking thosefees in 2000,”

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Morgan Stanley stock analysts predict that midsize moneymanagers will be doing much of the suffering as fees continue tofall.

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The report cites a Morgan Stanley base case forecast for feeincome for Waddell & Reed Financial Inc. and Janus HendersonGroup plc to decline 16 percent and 15 percent, respectively,during the next three years.

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READ MORE:

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How advisors can survive and thrive in afee-conscious world

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Higher fees don't help pension funds beatbenchmarks

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.