Popularity of No-Load Mutual Funds Whittles Down Fees

Thanks to the popularity of no-load funds, the average expense ratio for mutual funds has been steadily declining over the past three decades, per a report from the Investment Company Institute.

According to ICI’s “Trends in the Expenses and Fees of Funds,” between 1996 and 2024, the average expense ratio for equity and bond mutual funds dropped 62% and 55%, respectively. During that time, U.S. gross sales of long-term mutual funds without 12b-1 fees doubled to 92% in 2024 from 46% in 2000. Additionally, between 2011 and 2025, the share of assets in index mutual funds and exchange-traded funds surged to 51% of all long-term mutual fund net assets, up from 19%.

“Retail investors in the U.S. save considerable money over the course of their investing lives thanks to a vibrant and competitive fund market,” said Shane Worner, the ICI’s senior director of industry and financial analysis, in a statement.

During 2024, the average expense ratio for equity mutual funds declined three basis points to 0.40%, while bond mutual funds’ average expense ratio edged one basis point higher to 0.38%. The average expense ratio for index equity ETFs fell two basis points to 0.14%, and the average expense ratio for index bond ETFs was down one basis point to 0.10%.

According to ICI research, the expense ratios for mutual funds often depend on what kind of fund it is. Money market mutual funds and bond funds tend to have lower expense ratios than equity and hybrid mutual funds, for example. Within equity mutual funds, global funds and sector funds—such as tech, energy and health care—tend to have higher expense ratios because they typically cost more to manage.

Fund size and asset growth also factor into expense fees. For example, fund costs such as transfer agency fees, accounting fees, audit fees and director fees are essentially fixed in dollar terms, according to the report. “As a result, when fund assets rise, these relatively fixed costs make up a smaller proportion of a fund’s expense ratio,” the report stated.  

Expense ratios can also can vary widely within a fund’s objective. For instance, ICI research found that 10% of equity mutual funds focusing on growth stocks have expense ratios of 0.59% or less, while another 10% have expense ratios at least three times that at 1.77% or greater.

As of the end of 2024, sector equity mutual funds had the highest average asset-weighted expense ratio at 0.68%, with high-yield bond mutual funds next at 0.60%. They were followed by hybrid mutual funds and growth equity mutual funds at 0.58% each. Meanwhile, index equity mutual funds had the lowest average asset-weighted expense ratio at 0.05%, followed by money market mutual funds and blended equity mutual funds at 0.22% and 0.23%, respectively.