Report: Both Mutual Fund & ETF Fees Declined Again in 2025
While performance comes first when it comes to funds, fees are nothing to sniff at. Even a few basis points can make all the difference at the end of a year or during retirement. In a piece of good news for advisors, mutual fund and ETF fees fell overall again in 2025. They stayed around historic lows as more and more ETFs and mutual funds compete for assets.
See more: Holding Cash in Money Market Funds? You May Be Missing Out
The report by the Investment Company Institute (ICI), released Wednesday, found that all wrapper and style combinations have seen fees decline on average since 2017. Active and passive mutual funds have seen average fees decline over the last three decades. Average ETF fees, meanwhile, have fallen significantly since 2017, the report, “Trends in the Expenses and Fees of Funds, 2025,” said.
“The long-term decline in fund expense ratios reflects strong competition and economies of scale across the industry, as well as investors’ increasing preference for lower-cost funds,” said Shane Worner, ICI’s senior director of industry and financial analysis. “As assets have grown and new entrants and products have expanded the marketplace, firms have reduced costs and delivered more cost-effective investment options to investors.”
Specifically, the report found that from 1996 to 2025, average expense ratios dropped 62% equity mutual funds. They dropped 57% for bond mutual funds. Meanwhile, expense ratios for index equity and bond ETFs have decreased by 33% and 50%. Its analysis uses asset-weighted average expense ratios to make its comparisons.
