Morningstar Finds Investors Saved Nearly $9.8 Billion In Fund Fees In 2022

August 8, 2023

The annual U.S. Fund Fee Study reports record-low average expense ratio for mutual funds and ETFs, driven by heavy outflows from expensive funds

CHICAGO, Aug. 8, 2023 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today published its annual fund fee study, which evaluates trends in the cost of United States (U.S.) open-end mutual funds and exchange-traded funds (ETFs)1. The study found that the asset-weighted average expense ratio of U.S. funds fell to 0.37% in 2022 from 0.40% in 2021, saving investors an estimated $9.8 billion as a result.

"We saw substantial assets wiped from expensive funds in 2022 as investors poured their money into lower-cost funds to minimize investment costs," said Bryan Armour, Morningstar's director of passive strategies research. "Asset managers have responded to this trend by cutting fees to vie for market share, and the end result is a win for investors."

Key findings from the study include:

  • The average expense ratio paid by fund investors has been falling for over two decades. In 2022, the asset-weighted average expense ratio of U.S. open-end mutual funds and ETFs was 0.37%, compared with 0.91% in 2002.
  • In 2022, the gap in flows for cheap and expensive funds grew into a chasm. For the first time since 2017, the cheapest quintile of funds pulled in over $1.1 trillion more than the remaining 80% of funds, as the cheapest 20% saw net inflows of $394 billion while the remaining 80% of funds shed $734 billion in outflows.
  • For active funds, the asset-weighted average expense ratio fell to 0.59% in 2022 from 0.61% in 2021, driven mainly by large net outflows from expensive funds and share classes. For passive funds, the asset-weighted average expense ratio dropped to 0.12% in 2022 from 0.13% a year earlier.
  • Investors in sustainable funds are paying a "greenium" relative to investors in conventional funds. This is evidenced by these funds' higher asset-weighted average expense ratio, which stood at 0.50% at the end of 2022 versus 0.37% for their traditional peers.
  • Strategic-beta funds are an alternative to higher-cost actively managed funds. In 2022, the asset-weighted average fee for strategic-beta funds was 0.18%, higher than the figure for traditional index funds (0.12%) but significantly lower than for active funds (0.59%).
  • Although some of its competition continues to gain ground, Vanguard still claims the lowest asset-weighted average expense ratio among asset managers, which was 0.08% in 2022.

The 2022 U.S. Fund Fee Study is available here. An article on, which summarizes key findings and trends, is available here.

U.S. Fund Fee Trends Notebook in Morningstar Direct's Analytics Lab

The U.S. Fund Fee dataset used for the 2022 U.S. Fund Fee Study is accessible to Morningstar Direct users within Analytics Lab. With the U.S. Fund Fee Trends notebook, users can evaluate fee trends within the universe of U.S. mutual funds and ETFs. The notebook facilitates analysis of short- and long-term fund fees through a variety of lenses, including whether funds are active or passive, based on their Morningstar Category membership, whether they or their share classes are bundled, semi-bundled, or un-bundled, and more.

Morningstar's prebuilt datasets in Analytics Lab scale analysis, visualize results, and document methodology so users can automate processes that were previously cumbersome or not available. Learn more about Analytics Lab here.

About Morningstar, Inc. 

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and services for individual investors, financial advisors, asset managers and owners, retirement plan providers and sponsors, and institutional investors in the debt and private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $264 billion in assets under advisement and management as of June 30, 2023. The Company operates through wholly- or majority-owned subsidiaries in 32 countries. For more information, visit Follow Morningstar on Twitter @MorningstarInc.

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Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Morningstar Manager Research provides independent, fundamental analysis on managed investment strategies. Morningstar views are expressed in the form of Morningstar Medalist Ratings, which are derived through research of three key pillars—People, Process, and Parent. The Morningstar Medalist Rating is the summary expression of Morningstar's forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. A global research team issues detailed research reports on strategies that span vehicle, asset class, and geography. Medalist Ratings are not statements of fact, nor are they credit or risk ratings, and should not be used as the sole basis for investment decisions. A Medalist Rating is not intended to be nor is a guarantee of future performance. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.  

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1 The study excludes money market funds and funds of funds.


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