Fund Expense Ratio Benchmarks
What to expect for index funds, ETFs, and active funds  plus the long-term cost of fees
Key Numbers
Index Funds
0.03–0.20%
Active Funds
0.50–1.00%
Industry Avg
0.34% (2024)
1% Fee Impact
~25% Less / 30 Yrs
Expense ratios represent the annual cost of owning a fund, expressed as a percentage of assets. These fees are deducted automatically from fund returns — you never receive a bill, but they directly reduce your investment growth.
Expense Ratio Benchmarks
| Fund Type | Low | Average | High |
|---|---|---|---|
| S&P 500 Index Fund | 0.00–0.03% | 0.05–0.10% | >0.20% |
| Total Market Index | 0.00–0.04% | 0.05–0.15% | >0.25% |
| International Index | 0.05–0.10% | 0.10–0.20% | >0.35% |
| Bond Index Fund | 0.03–0.06% | 0.07–0.15% | >0.25% |
| Active Equity Fund | 0.30–0.50% | 0.50–0.75% | >1.00% |
| Target Date Fund | 0.08–0.15% | 0.20–0.40% | >0.60% |
Industry Averages (Asset-Weighted, 2024)
| Category | Avg. ER | Trend |
|---|---|---|
| Passive / Index Funds | 0.11% | Down from 0.27% in 2005 |
| Active Funds | 0.59% | Down from 1.00% in 2005 |
| All Funds Combined | 0.34% | Down 59% from 0.83% in 2005 |
| Vanguard Average | 0.07% | 84% below industry average |
Source: Morningstar 2024 US Fund Fee Study, Investment Company Institute.
Costs by Fund Type
Expense ratios vary dramatically by management style and asset class. Actively managed funds charge more to cover research staff and trading costs, though most fail to overcome this fee headwind over time.
Active Fund Expense Ratios by Category
| Category | Avg. ER | Low-Cost | High-Cost |
|---|---|---|---|
| US Large Cap Equity | 0.60% | 0.25–0.40% | 1.00–1.50% |
| US Small Cap Equity | 0.85% | 0.40–0.60% | 1.20–1.75% |
| International Equity | 0.75% | 0.35–0.55% | 1.10–1.60% |
| Bond Funds | 0.45% | 0.15–0.30% | 0.75–1.25% |
Source: Morningstar 2024 US Fund Fee Study. Asset-weighted averages.
401(k) Plan Fund Averages (2024)
| Fund Type | 401(k) Avg. | Industry Avg. | Note |
|---|---|---|---|
| Equity Funds | 0.26% | 0.40% | 35% below retail |
| Target Date Funds | 0.29% | 0.40% | Down 57% since 2008 |
| Bond Funds | 0.27% | 0.38% | 29% below retail |
401(k) advantage: Employer-sponsored plans often negotiate institutional share classes with lower expense ratios than retail investors can access individually.
Long-Term Fee Impact
Small differences in expense ratios compound dramatically over time. A 1% annual fee difference can cost roughly 25% of final portfolio value over a 30-year investing career.
$10,000 Investment Growth at 7% Gross Return
| Expense Ratio | 10 Years | 20 Years | 30 Years | Lost to Fees |
|---|---|---|---|---|
| 0.03% (Index ETF) | $19,610 | $38,460 | $75,400 | $227 |
| 0.20% (Low-cost active) | $19,290 | $37,220 | $71,820 | $3,810 |
| 0.50% (Average active) | $18,770 | $35,240 | $66,150 | $9,470 |
| 1.00% (High-cost) | $17,910 | $32,070 | $57,430 | $18,190 |
| 1.50% (Very high) | $17,100 | $29,250 | $50,030 | $25,600 |
Annual Fee Drag on a 7% Gross Return
| Expense Ratio | Net Return | Fee Drag | Typical Fund |
|---|---|---|---|
| 0.03% | 6.97% | −0.03% | S&P 500 index ETF |
| 0.20% | 6.80% | −0.20% | Low-cost active fund |
| 0.50% | 6.50% | −0.50% | Average active fund |
| 1.00% | 6.00% | −1.00% | High-cost active fund |
Active fund track record: Over 15-year periods, approximately 90% of actively managed funds fail to beat their benchmark index after fees (SPIVA scorecard data).
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.