United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office General Government Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2000-06-07 monographic deposited born digital 132 p. GA 1.13:GGD-00-126 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-126 P0b002ee18039e4ef f:gg00126 DGPO 2010-08-12 2011-03-28 GAOREPORTS-GGD-00-126 machine generated eng fdlp REPORT GAOREPORTS-GGD-00-126 GGD-00-126 Securities regulation Brokerage industry Information disclosure Investments Competition Mutual funds Fees Chapter Report GGD

Pursuant to a congressional request, GAO reviewed issues relating to mutual fund fees, focusing on: (1) the trend in mutual fund advisers' costs and profitability; (2) the trend in mutual fund fees; (3) how mutual funds compete; (4) how fees are disclosed to fund investors and how industry participants view these disclosures; and (5) what mutual fund directors' responsibilities are regarding fees and how industry participants view directors' activities.<p/>GAO noted that: (1) GAO was unable to determine the extent to which the growth of mutual fund assets during the 1990s provided the opportunity for mutual fund advisers to reduce fees on the funds they operated; (2) according to research, mutual fund advisers experience operational efficiencies as their assets grow that could allow them to reduce their funds' expense ratios; (3) because information on most fund advisers' costs is not collected by regulators or otherwise publicly disclosed, GAO was unable to determine if advisers' costs had increased more, or less, rapidly than fund assets; (4) GAO determined that the 480 percent growth in total fee revenues for advisers and other service providers for stock and bond funds commensurate with the total 490 percent asset growth in those funds during the period 1990 to 1998; (5) because of the unavailability of comprehensive financial and cost information, GAO was unable to determine overall industry profitability; (6) although unable to measure the extent to which mutual fund advisers experienced economies of scale, GAO's analysis indicated that mutual fund expense ratios for stock funds had generally declined between 1990 and 1998; (7) however, this decline did not occur consistently over this period, and not all funds had reduced their expense ratios; (8) GAO found that not all of the largest funds with the greatest asset growth had reduced their fees; (9) while thousands of mutual funds compete actively for investor dollars, competition in the mutual fund industry may not be strongly influencing fee levels because fund advisers generally compete on the basis of performance or services provided rather than on the basis of the fees they charge; (10) requiring that investors be provided information about the fees they pay on their mutual funds is another way regulators seek to help investors evaluate fees charged by mutual funds; (11) although most industry officials GAO interviewed considered mutual fund disclosures to be extensive, others indicated that the information currently provided does not sufficiently make investors aware of the level of fees they pay; (12) under the law, mutual fund directors are expected to review various data to ensure that the fees are not excessive and that the fees are similar to those of comparable funds; and (13) however, industry participants commented that directors' activities may be keeping fees at higher levels because of the focus on maintaining fees within range of other funds. https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-126/html/GAOREPORTS-GGD-00-126.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GGD-00-126/pdf/GAOREPORTS-GGD-00-126.pdf GAO/GGD-00-126 https://www.govinfo.gov/app/details/GAOREPORTS-GGD-00-126 Chapter Report GAO/GGD-00-126; Mutual Fund Fees: Additional Disclosure Could Encourage; Securities regulation Brokerage industry Information disclosure Investments Competition Mutual funds Fees Title 15 Section 80a-35(b) 15 U.S.C. 80a-35(b)