It's an enormous debate. Critics have long charged that fund fees haven't fallen enough, especially because it's cheaper to run big funds. Expenses have fallen slightly the past four years, the study says. Many funds now use annual 12b-1 marketing fees to pay brokers, instead of upfront sales charges. The SEC's report agrees.
Bond funds are less expensive to run than stock funds.
In 1992, bond funds were the most popular funds. Now, stock funds are. Fees do tend to fall as funds get larger. The Investment Company Institute, the funds' trade group, says the SEC's findings largely came to the same conclusions as their own study, released last year. The SEC found that as stock and bond fund assets increase, automatic fee reductions at most mutual funds drive down expense ratios, says Matthew Fink, the ICI's president.