Downward Trend in Fund Fees and Expenses
Chart of the Week for August 4-10, 2006
The chart shows the historical asset-weighted average fees and expenses of equity and bond funds since 1980, according to the Investment Company Institute's recent study.
High fees and expenses of mutual funds have long been considered as a detractor from investment returns and a major reason that mutual funds cannot beat the market. However, the average fees and expenses of equity and bond funds have declined to 1.13% and 0.90% respectively, in 2005, from 2.32% and 2.05% in 1980. Lower fees and expenses of mutual funds are especially beneficial to long-term investors because that leaves higher after-fee returns for compounding. The trend of declining fees and expenses is caused by several reasons. Low-cost funds have gained popularity among investors, and economies of scale created by higher assets under management allows mutual fund firms to further reduce fees and expenses.
ICMA-RC understands the importance of low fund fees and expenses to our plan participants. Our professionals are working diligently to ensure that our funds are cost-effective solutions to building retirement security.
This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.
Please consult both the current applicable prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights, investment objectives, risks and performance information. Investing in mutual funds and other investment vehicles involves risk, including possible loss of the amount invested. Investors should consider the Fund's investment objectives, risks, charges and expenses before investing or sending money. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing. All Vantagepoint Funds invested through 401 or 457 plans are held through VantageTrust. Vantagepoint Funds are distributed by ICMA-RC Services LLC, a wholly owned broker-dealer subsidiary of ICMA-RC and member FINRA/SIPC. For a current prospectus, contact ICMA-RC Services, LLC.
The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.