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401(k) Plan Expense Ratios Down, Says ICI

Expenses charged to 401(k) plan participants declined in 2013, says a new study from the Investment Company Institute (ICI). In “The Economics of Providing 401(k) Plans: Services, Fees and Expenses, 2013,” the ICI reports that last year, participants spent less when they invested in equity, hybrid and bond funds. 

This was not a new trend. Plan participants not only spent less in 2013 than in 2012, but the expense ratios for investing in equity, hybrid and bond funds were all lower than in 2000 — falling over those 13 years by 25% for equity funds, 20% for hybrid funds and 19% for bond funds. 

The statistics have broader implications due to the hefty portion of overall 401(k) investments that are in mutual funds. ICI says that almost 38% of the $4.2 trillion in 401(k) assets were invested in equity funds alone by the end of 2013. The proportion of 401(k) funds invested in mutual funds overall grew from 9% in 1990 to 63% by the end of 2013.