He and others also favor requiring each prospectus to carry an average expense ratio for funds in similar categories so consumers could see whether the ones they are investing in fall above or below that mark. The SEC is considering many of these suggestions. In addition, last spring the agency launched a study that is expected to be concluded this summer on fees, including whether economies of scale are passed on to consumers. And it is looking at how independent directors on fund boards perform their task of making sure fees are reasonable. It's an issue that has been raised in several recent lawsuits, including one by two Maryland investors against T. Rowe Price.
Many independent directors serve on the board of several funds owned by the same company.
Plaintiffs argue that such directors, who are paid for each board they sit on, aren't truly independent and therefore can't act impartially on investors' behalf. Henry Hopkins, general counsel of T. Rowe Price, said the company has done nothing wrong. The level and quality of services we produce today is so much greater than 20 years ago, and certainly our fees have stayed in the ballpark. Investment Company Institute officials say evidence suggests that consumers do indeed gravitate to better-priced products. About 77 percent of the 150 million mutual fund accounts are in funds with below-average costs, said ICI spokesman John Collins.