PLANSPONSOR - February/March 2020 - 8

INDUSTRY ANALYSIS
Focus on Expense Ratios
THE EXPENSE ratio of a fund is its total
annual expenses expressed as a percentage
of its net assets. 401(k) plan participants
who invest in mutual funds tend to hold
lower-cost funds than mutual fund investors,
in general, hold. This is because some
plan sponsors cover a portion of 401(k)
plan costs, enabling them to select lowercost
funds or fund share classes, and both
sponsors and participants make cost- and
performance-conscious decisions.
According to recent research from
the Investment Company Institute (ICI),
90% of 401(k) plan equity mutual fund
assets were invested in mutual funds
with expense ratios of less than 1%. This
is consistent with the broader trend of
declining fees across the fund industry.
Not only do average expense ratios
incurred by 401(k) plan investors differ
by investment objective but by the size
of the 401(k) plan itself. Looking at
the 2019 PLANSPONSOR DC Survey
expense ratios by average asset-weighted
investment ratios, the largest percentage
of plans, 27%, had a ratio of .25% through
.50%. Only 4% of plans had a ratio over 1%.
This is consistent with the ICI data.
Almost half of plans with less than
$1 million in assets were unsure about
their expense ratios, while far fewer,
20.5%, were " unsure " when assets were
$1 billion-plus. Plan sponsors have a fiduciary
duty to know and understand what
these fees and expenses are and to ensure
they are reasonable. -Judy Faust Hartnett
Approximate Average Expense Ratio of All Retirement Plan Investment Options
<0.25%
(<25 bps*)
0.25%-0.50%
(25-50 bps)
26.5%
17.5%
13.9%
Overall
<$1mm
$1mm - $5mm
>$5mm - $10mm
>$10mm - $25mm
>$25mm - $50mm
>$50mm - $100mm
>$100mm - $200mm
>$200mm - $500mm
>$500mm - $1b
>$1b
14.5%
12.7%
16.9%
10.8%
17.3%
16.4%
19.6%
18.7%
25.2%
43.8%
Source: 2019 PLANSPONSOR DC Survey
11.8%
18.9%
20.8%
24.4%
30.4%
37.7%
33.5%
42.3%
39.3%
30.5%
11.8%
11.3%
11.5%
20.4%
14.7%
18.4%
19.6%
14.8%
11.2%
3.8%
7.2%
8.1%
8.6%
9.9%
11.2%
7.1%
5.7%
3.8%
2.2%
1.9%
1.0%
3.8%
5.4%
7.9%
4.2%
3.3%
3.8%
0.8%
0.6%
1.0%
0.0%
0.5%
0.50%-0.75%
(51-75 bps)
0.75%-1%
(76-100 bps)
>1%
(>100 bps)
Unsure/
Don't know
31.2%
48.4%
40.6%
36.6%
30.0%
26.6%
20.9%
22.8%
20.9%
22.4%
20.5%
*Basis points.
8 PLANSPONSOR.COM February - March 2020

http://www.PLANSPONSOR.COM

PLANSPONSOR - February/March 2020

Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2020

The Case for a Process
2020 PLANSPONSOR Best in Class 401(k) Plans
A Changed Perspective
Seize the Opportunity
Ready As It Goes
Income Insight
Good Read
PLANSPONSOR - February/March 2020 - Cover1
PLANSPONSOR - February/March 2020 - Cover2
PLANSPONSOR - February/March 2020 - 1
PLANSPONSOR - February/March 2020 - 2
PLANSPONSOR - February/March 2020 - 3
PLANSPONSOR - February/March 2020 - 4
PLANSPONSOR - February/March 2020 - 5
PLANSPONSOR - February/March 2020 - 6
PLANSPONSOR - February/March 2020 - 7
PLANSPONSOR - February/March 2020 - 8
PLANSPONSOR - February/March 2020 - 9
PLANSPONSOR - February/March 2020 - 10
PLANSPONSOR - February/March 2020 - 11
PLANSPONSOR - February/March 2020 - 12
PLANSPONSOR - February/March 2020 - 13
PLANSPONSOR - February/March 2020 - The Case for a Process
PLANSPONSOR - February/March 2020 - 15
PLANSPONSOR - February/March 2020 - 16
PLANSPONSOR - February/March 2020 - 17
PLANSPONSOR - February/March 2020 - 18
PLANSPONSOR - February/March 2020 - 19
PLANSPONSOR - February/March 2020 - 2020 PLANSPONSOR Best in Class 401(k) Plans
PLANSPONSOR - February/March 2020 - 21
PLANSPONSOR - February/March 2020 - 22
PLANSPONSOR - February/March 2020 - 23
PLANSPONSOR - February/March 2020 - 24
PLANSPONSOR - February/March 2020 - 25
PLANSPONSOR - February/March 2020 - 26
PLANSPONSOR - February/March 2020 - 27
PLANSPONSOR - February/March 2020 - 28
PLANSPONSOR - February/March 2020 - 29
PLANSPONSOR - February/March 2020 - A Changed Perspective
PLANSPONSOR - February/March 2020 - 31
PLANSPONSOR - February/March 2020 - 32
PLANSPONSOR - February/March 2020 - 33
PLANSPONSOR - February/March 2020 - Seize the Opportunity
PLANSPONSOR - February/March 2020 - 35
PLANSPONSOR - February/March 2020 - Ready As It Goes
PLANSPONSOR - February/March 2020 - 37
PLANSPONSOR - February/March 2020 - Income Insight
PLANSPONSOR - February/March 2020 - 39
PLANSPONSOR - February/March 2020 - Good Read
PLANSPONSOR - February/March 2020 - 41
PLANSPONSOR - February/March 2020 - 42
PLANSPONSOR - February/March 2020 - 43
PLANSPONSOR - February/March 2020 - 44
PLANSPONSOR - February/March 2020 - 45
PLANSPONSOR - February/March 2020 - 46
PLANSPONSOR - February/March 2020 - 47
PLANSPONSOR - February/March 2020 - 48
PLANSPONSOR - February/March 2020 - Cover3
PLANSPONSOR - February/March 2020 - Cover4
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