401(k) plan participants invested in mutual funds on average paid slightly higher expense ratios in 2009, Reuters reports .

According to Reuters, which cited data from the Investment Company Institute , the asset-weighted average expense ratio paid by 401(k) investors on their stock funds rose three basis points to 74 bps. The expense ratio paid on bond funds increased by two basis points to 55 bps.

Expense ratios of stock and bond funds overall (not just in 401(k) plans) averaged slightly higher in 2009, compared with 2008.

At the end of 2009, 401(k) plans held $2.8 trillion in assets, of which $1.53 trillion, or 55 percent, were invested primarily in stock mutual funds, according to the ICI. More than three-quarters of stock mutual fund assets held in 401(k) plans were in stock mutual funds with expense ratios less than one percent.

The average turnover rate for stock mutual funds held in 401(k) plans increased to 54 percent from 50 percent in 2008. The turnover rate last year was the highest since 2002.

The industrywide simple average turnover rate in stock funds was 113 percent in 2009, up from 104 percent the prior year and the highest since 2002, the report showed. 

Edited by: Hung Tran


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