Average Mutual Fund Costs

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The following table provides the Net Expense Ratio and the Turnover Ratio for all the broad Morningstar Mutual Fund Categories. As you can see, both these ratios are considerably higher than the comparable numbers for Exchange Traded Funds. For example, the weighted average Expense Ratio for our Global Equity ETF Model is 0.31% vs. 1.46% average for World Stock Mutual Funds. This saving goes directly to augment the investor’s bottom line. You can use this table to compare the costs of your current portfolio to an average Mutual Fund and get an idea of where you stand on the cost curve.

MUTUAL FUND AVERAGE EXPENSE & TURNOVER RATIOS

 

NAME/CATEGORY
Prospectus Net Expense Ratio
Turnover Ratio %
DOMESTIC EQUITY
US OE Large Blend 0.94 64.9
US OE Mid-Cap Blend 1.07 57.6
INTL DEVELOPED EQUITY
US OE Foreign Large Blend 1.01 55.17
US OE Foreign Small/Mid Blend 1.27 53.18
US OE Europe Stock 1.24 91.94
US OE Pacific/Asia ex-Japan Stk 1.37 60.53
EMERGING MARKETS EQUITY
US OE Diversified Emerging Mkts 1.33 63.21
WORLD EQUITY
US OE World Large Stock 1.14 44.5
DOMESTIC FIXED INCOME
US OE Short-Term Bond 0.73 101.14
US OE Intermediate-Core Bond 0.67 193.06
US OE Long-Term Bond 0.7 84.13
US OE High Yield Bond 1.02 63.62
US OE Inflation-Protected Bond 0.85 72.72
US OE Muni National Interm 0.74 36.93
US OE High yield Muni 0.96 40.18
US OE Multisector Bond 1.09 103.4
WORLD FIXED INCOME
US OE World Bond 0.98 115.83
EMERGING MARKETS FIXED INCOME
US OE Emerging Markets Bond 1.09 102.71
GLOBAL BALANCED
US OE World Allocation 1.21 78.8
TRADITIONAL ALTERNATIVES
US OE Commodities Broad Basket 1.27 199.74
US OE Natural Res 1.38 60.18
US OE Convertibles 1.16 90.68
US OS Real Estate 1.21 77.81
US OE Global Real Estate 1.26 75.04
ALTERNATIVE INVESTMENTS
US OE Long/Short Equity 2.16 327.36
US OE Managed Futures 1.87 79.24
US OE Market Neutral 2.15 225.75
US OE Multialternative 1.81 158.29
ASSET-ALLOCATED FUNDS
US Fund Allocation–15% to 30% Equity 1.02 55.42
US Fund Allocation–50% to 70% Equity 1.10 53.34
US Fund Allocation–85%+ Equity 1.24 49.10
TARGET DATE FUNDS
US OE Target Date 2000-2010 0.62 35.83
US OE Target Date 2015 0.67 33.40
US OE Target Date 2020 0.75 37.87
US OE Target Date 2025 0.73 33.32
US OE Target Date 2030 0.77 30.35
US OE Target Date 2035 0.75 30.93
US OE Target Date 2040 0.79 29.94
US OE Target Date 2045 0.76 31.16
US OE Target Date 2050 0.79 31.45
US Fund Target-Date 2055 0.77 33.26
US Fund Target-Date 2060+ 0.76 40.87

SOURCE: Morningstar (February 2020)

Compared to ETFs, a mutual fund is generally less tax inefficient, offers less transparency (with respect to holdings), has a higher cost, and is less liquid (can only be purchased/sold at the close of the trading day).  ETFs are typically more transparent with respect to their current holdings and can be purchased/sold throughout the trading day.  

 

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