“Trends in the Expenses and Fees of Mutual Funds, 2013” examines fund expense ratios or a fund’s total annual expenses expressed as a percentage of its net assets. The report shows expense ratios of hybrid funds, bond funds, and target-date funds were largely unchanged in 2013, after declining significantly in the prior several years.

In 2013, the average expense ratio investors paid for equity funds saw a decrease of 74 basis points (0.74%), representing a drop of three basis points from 2012, according to the report. The average expense ratio of bond funds remained unchanged at 61 basis points, consistent with a small percentage decrease in the total assets of bond funds last year. The average expense ratio of hybrid funds rose by one basis point in 2013, to 80 basis points.

“Appreciably lower expense ratios paid by investors for equity mutual funds in 2013 reflect the strongly competitive nature of the fund industry, as well as gains in equity fund assets which, through economies of scale, helped lower fund expense ratios,” says Sean Collins, ICI’s senior director of Industry and Financial Analysis, based in Washington, D.C. “This report also shows that the average expenses of both actively managed funds and index equity funds have been trending downward for more than a decade.”

The report also shows assets in equity funds increased from $5.94 trillion in 2012 to $7.76 trillion in 2013, reflecting both net cash inflows from investors and strong stock market performance. The decrease in expenses paid for equity funds in 2013 marked the fourth straight year of decreases, after an increase of four basis points in 2009 in the wake of the financial crisis.

This pattern is not unexpected, given the decline in the stock market during the financial crisis and the stock market’s subsequent recovery, say the report’s authors. They note that fund expense ratios often vary inversely with fund assets because of economies of scale.

During the last decade, the report notes, the average expense ratio of actively managed equity funds has decreased 19 basis points, while that of equity index funds has decreased 13 basis points. In addition, the average expense ratio of bond funds has decreased 19% and that of hybrid funds has decreased 11% during same time frame.

When it comes to money market funds, the average investor paid an expense ratio of 17 basis points in 2013, one basis point less than in 2012. The report says the expense ratios of money market funds have decreased sharply for several years as the majority of funds waived fees to ensure investors’ net returns remained positive in the continuing low interest rate environment.

Among funds-of-funds, the average expense ratio incurred by investors was 80 basis points in 2013, three basis points less than in 2012. The total expense ratio of funds-of-funds includes the expenses that a fund pays directly out of its assets, as well as the expense ratios of the underlying funds in which it invests. The report notes that since 2005, the average expense ratio for investing in funds of funds has decreased 21 basis points.

For target-date mutual funds, which are often structured as funds-of-funds, investors paid an average expense ratio of 58 basis points in 2013, which is unchanged from 2012. During the past five years, the average expense ratio of target-date funds has decreased 13%.

For the report, ICI evaluated fee trends using asset-weighted averages to summarize the expenses that shareholders actually pay through mutual funds. To compute the average, ICI weights each fund’s expense ratio by that fund’s end-of-year assets. The report is here.