Insight September 2011 Monthly Update

The September issue of Insight examines the trends in mutual fund management expense ratios (MERs). Over time, the restructuring of the industry’s manufacturing, repackaging and distribution models has eroded the value of the MER as an indicator of the ultimate cost-to-customer. However, MER trends remain an important gauge of the level of intensity of internal and external competitive pressures on mutual fund players and products. The research confirms that mutual fund MERs have been trending down consistently—albeit modestly—over the past several years. Our analysis puts the industry aggregate asset-weighted MER at the end of 2010 at 1.96%. The drivers of the decline are diverse; the research article drills into the impact of factors such as the industry’s asset mix, taxes, the expansion in multi-series structures, changes to load structures and management fee levels. The Trend Lines article provides our first-ever benchmark for the size and composition of the registered disability savings plan (RDSP) segment.