Posted by msf on November 06, 2009 at 19:37:43:
In Reply to: Here's Lipper Report posted by Kevin on November 06, 2009 at 14:04:51:
"We excluded all ... funds that are operated on at at-cost basis, and funds with all-inclusive management fee structures (whereby the fund's management fee covers substantialy all of the fund's operating expenses)."
Vanguard is excluded: "Vanguard is owned by the Vanguard funds, allowing us to operate "at cost" and charge fund shareholders - our owners - only what is needed to cover operating expenses."
American Century funds, or at least the legacy funds from 20th Century (where the fund expenses were all 1.00% as I recall) are excluded. Sample prospectus (Ultra): "The fund pays the advisor a single, unified management fee for arranging all services necessary for the fund to operate."
Certainly the expense ratios of many funds rose in the time frame covered by the study. While I can understand excluding funds of funds (since their expenses are heavily dependent on the acquired funds' costs, over which they have relatively little control), I see no reason to exclude funds operated at cost, and little reason to exclude funds with all-inclusive fee structures. (Since the study breaks down the changes in fees into their component parts - management fees, transfer agency expenses, etc. - this part of the analysis would be impossible with an all-inclusive fee structure. But changes in total fees would still be visible.)
According to the study, "surprisingly [and I agree with this adverb] the median management expense for most asset classes was largely unchanged from 2008 levels.... On an average basis, however, ... equity funds realized substantial declines in actual management expenses." Emphasis added.
I would have expected management expenses to go up - but not because the management company raised its fees. Rather, because of breakpoints in the existing management fee structure. But despite this effect, management fees didn't rise (median), according to the study.