Which Fund Companies Punch Above Their Weight?
A cleaner comparison of fund pricing among the largest sponsors of index mutual funds and ETFs.
Earlier this year, my colleagues published Morningstar’s annual U.S. Fund Fee Study which offers insights into fee trends across the U.S. fund landscape. This article aims to build on that comprehensive report. Here, I will examine fees among the largest providers of index mutual funds and exchange-traded funds. The largest firms in this universe continue to hoover up assets. These fund flows have tended to land in low-cost funds tracking broadly diversified, market-cap-weighted indexes. As outlined in our annual fee study, the decline of asset-weighted fees over recent years is largely attributable to investors moving toward cheaper funds—index mutual funds and ETFs in particular—rather than fee cuts.
The Big Get Bigger
Exhibit 1 shows assets under management and run-rate fee revenue for the largest sponsors of index mutual funds and ETFs. I calculated run-rate fee revenue as the product of funds’ AUM and prospectus net expense ratio. All data is as of June 30, 2018 (this data does not reflect fee reductions after June 30, 2018).
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