July 01, 2011
--- According to an annual report by the Investment Company Institute
(ICI), 401(k) plan participants invested in stock mutual funds on
average paid lower expense ratios in 2010. ---
The report,
The Economics of Providing 401(k) Plans: Services, Fees and Expenses, 2010,
shows at year-end 2010, $1.8 trillion, or more than half,
of the $3.1 trillion in 401(k) assets was invested in mutual funds,
primarily in stock funds.
The asset-weighted average expense ratio paid by 401(k)
investors on their stock funds dropped 3 basis points to 0.71% in 2010,
slightly lower than the 2009 average. According to the ICI, the
401(k) average expense ratio is measured as a 401(k)
asset-weighted average; the total expense ratio, which is reported as a
percentage of fund assets, includes fund operating expenses and the
12b-1 fee.
“The drop in the average expense ratio incurred by 401(k)
investors in stock mutual funds reflects cost-conscious decisionmaking
by plan sponsors and plan participants, as well as the impact of rising
stock values in 2010, which helped to spread fixed fund expenses across a
larger asset base,” said Sarah Holden, Senior Director of Retirement
and Investor Research.