Morningstar Runs the Numbers

Inspired by Harper's Index (with a tip of the hat to FiveThirtyEight's Significant Digits blog), Morningstar Runs the Numbers uses a numbers-based approach to highlight recent Morningstar research, along with some outside news stories.

0.57% Morningstar released a study of U.S. open-end mutual funds and exchange-traded funds that found that, on average, investors paid lower fund expenses in 2016 than ever before. The asset-weighted average expense ratio across funds (excluding money market funds and funds of funds) was 0.57% in 2016, down from 0.61% in 2015 and 0.65% three years ago. According to the study, the trend stems largely from investors voting with their feet for low-cost funds, which brought down the average fee paid.

"Our study found that the simple average expense ratio of the largest 2,000 funds (in 2013), which accounted for 85% of assets in mutual funds and ETFs, was 0.72% in 2016, unchanged from 2015 and 2014. So on average, the fund industry is not cutting fees on the most widely held funds, which means the decline in average mutual fund fees paid by investors stems largely from investors' migration to lower-cost funds."

77% A poll conducted by the American Institute of CPAs revealed that 77% of more than 1,000 respondents said they believed it's important to react quickly to breaking news, USA Today reported. The AICPA noted that are a few dangers of these hasty responses. One is that they often don't allow enough time to think decisions through, including tax implications. The other is that there is a lot of false or misleading financial articles, or "fake news" out there.

"…You should never feel rushed or pressured to make any financial moves--a key point gleaned from the AICPA survey. Even if a promising investment is legitimate, there usually will be time to weigh your decision. If not, wait for another opportunity to come along. Very few fortunes are amassed overnight--they invariably take time, patience and healthy doses of skepticism and common sense."

4 In this video, director of manager research Russ Kinnel discusses four funds that have recently undergone significant fee cuts.

3% The housing market is a relatively small part of GDP, around 3%. Director of economic analysis Bob Johnson explains why the number is worth paying attention to.

"There's still some potential in the housing market in that it's in the mid-3s in terms of percentage to GDP. But on average, it's been as high as 5% on average, and it's been the highest numbers around 7% of GDP. So, that's one of the few categories that obviously has some room to continue to grow. So, that's the real positive on the number."

5 Investors got a reminder of what volatility feels like last week when the markets plunged 2% in one trading session. Though stocks have since recovered those losses, there's always the possibility that volatility is lurking around the corner. The upside of broad market sell-offs is that they can surface great buying opportunities for bargain-hunters. When markets sell off indiscriminately, investors tend to dump even high-quality names--those with sturdy financials and durable competitive advantages--along with everything else. We take a closer look at five high-quality stocks that are currently selling at a discount to our fair value estimate.

1.6%

A bright spot in an otherwise disappointing quarter for retailers came from an unexpected place:

"Comps rose 1.6% (1.4% domestic, 4% international), aided by new gaming hardware (Nintendo Switch), mobile category strength due to unlimited data plans and Android preorders, and tax refund checks. Online sales were also encouraging, growing 22.5% or just a hair below Amazon's North America growth of 23.5%, implying strong traffic/conversion trends versus other retailers."

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