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Fund Spy

Watch Out for Rising Costs

Expense ratios were flat in 2008 but are rising in 2009.

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Mutual fund expense ratios were flat to slightly lower in 2008, but you're likely paying more than that now. (To see all the data on asset class trends, click here.)

Looking at asset-weighted retail expense ratios from 2008, most asset classes saw a 1 basis-point drop or no change from 2007. Overall, the asset-weighted average annual expense ratio dipped from 0.88% to 0.87%, though U.S. equity funds rose a basis point. Bond-fund expenses dipped as did those of international-equity funds.

Unfortunately that trend has likely reversed, and many funds today are charging more. The reason is easy to see: Open end mutual fund assets (excluding money funds and ETFs) totaled $4.8 trillion at the end of March 2009, down sharply from $7.8 billion at the beginning of 2008.

Russel Kinnel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.