Mutual Fund Expense Ratios Remain at Historic Lows for Retirement Savers

WASHINGTON, July 17, 2025 /PRNewswire/ -- Investment Company Institute (ICI) research released today finds that retirement savers in 401(k) plans saw average mutual fund expense ratios at historic lows for another year. The ICI's new report, "The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2024," reveals a vibrant and competitive 401(k) plan market for mutual funds, providing millions of American workers with a cost-effective investment vehicle to save for retirement.

For example, average equity mutual fund expense ratios incurred by 401(k) plan participants have fallen by 66 percent—a 50 basis point decline—from 0.76 percent in 2000 to 0.26 percent in 2024. The average expense ratios that 401(k) plan participants incurred for investing in hybrid and bond mutual funds also fell from 2000 to 2024—by 44 percent and 69 percent, respectively.

"The long-term downward trend in mutual fund fees for more than two decades is great news for investors looking to secure their financial future," said Sarah Holden, Senior Director of Retirement and Investor Research. "These results highlight the care with which plan sponsors curate their investment lineups to include professionally managed, cost-effective, diversified options."

Other key findings of the report include:

• 401(k) plan participants investing in mutual funds tend to hold lower-cost funds. At year-end 2024, 401(k) plan assets totaled $8.9 trillion, with 38 percent invested in equity mutual funds. In 2024, 401(k) plan participants who invested in equity mutual funds paid an average expense ratio of 0.26 percent, which is lower than the average expense ratio of 0.40 percent paid by investors industrywide.
  
  
• Numerous factors contribute to the relatively low expense ratios incurred by 401(k) plan participants investing in mutual funds. Among them are: (i) competition among mutual funds and other investment products to offer shareholders service and performance; (ii) plan sponsor decisions to cover a portion of 401(k) plan costs, which allow them to select lower‑cost funds or fund share classes; (iii) economies of scale, which large investors such as 401(k) plans can achieve; (iv) cost- and performance-conscious decision making by plan sponsors and plan participants; and (v) the limited role of professional financial advisers in these plans.
• The average expense ratio of target date mutual funds, an important investment option among 401(k) plan participants, has fallen steadily since 2008. The average expense ratio of target date mutual funds fell 57 percent from 0.67 percent in 2008 to 0.29 percent in 2024.

For more detail on equity, hybrid, bond, and money market mutual fund investing in 401(k) plans, visit the full report here. Data for all figures in the report are accessible here.

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SOURCE Investment Company Institute