WASHINGTON — After declining for a few years, mutual fund fees are starting to climb again. From 2003 to 2006, the average expense ratio edged down to 0.9 percent from 1 percent, according to Morningstar. A fund’s expense ratio is the percentage of assets an investment company deducts each year for a variety of management and administrative costs. The fees chip into a fund’s overall performance. Any rise is “bad news,” said Morningstar’s director of fund research, Russel Kinnel, “because we’ve found that costs are the best predictors of future returns.”
Last year, the average expense ratio was unchanged at 0.9 percent, according to the April edition of Morningstar’s FundInvestor report. Kinnel pointed out that the absence of further declines on top of a rise in costs in some broad classes such as balanced and municipal-bond funds indicate that the trend toward lower costs is ebbing.
“Although the trend is discouraging, there were plenty of good funds that lowered costs and even more that maintained already low costs,” Kinnel wrote. “You’ve got to seek them out because there are thousands of high-cost funds, and there will always be some formerly good funds cranking up fees for one reason or another.”
Here are some funds Morningstar picked out for cutting their fees:
Northeast Investors (NTHEX), down 0.55 basis points, to 0.68 percent.
Artisan Opportunistic Value (ARTLX), down 0.25 basis points, to 1.24 percent.
Primecap Odyssey Aggressive Growth (POAGX), Primecap Odyssey Stock (POSKX), Primecap Odyssey Growth (POGRX), down from 14 to 21 basis points, to 0.99 percent, 0.99 percent, and 0.89 percent, respectively.
Vanguard Growth Equity (VGEQX), down 20 basis points, to 0.68 percent.
FPA Crescent (FPACX), down 14 basis points, to 1.25 percent.
T. Rowe Price Global Stock (PRGSX), down 13 basis points, to 0.87 percent.
T. Rowe Price New Asia (PRASX), down 12 basis points, to 0.93 percent.
Harbor International Growth (HIIGX), down 12 basis points, to 1.25 percent.
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