The U.S. and Canada are alike in many ways, but according to a recent study, Mutual Fund Fees Around the World, mutual fund fees in the two countries vary widely. The study indicates that the U.S. is among the lowest cost countries and Canada is the highest fee country by far: 79 basis points versus 200 basis points.
The authors, Ajay Khorana from the Georgia Institute of Technology, Henri Servacs from the London School of Economics, and Peter Tufano from the Harvard Business School, studied fees charged by 46,799 mutual funds offered for sale in 18 countries, which together account for about 86% of the world fund industry. Fees vary substantially from country to country. They found that larger funds and fund complexes charge lower fees, as do funds selling cross-nationally, while fees are higher for funds distributed in more countries and funds domiciled in so-called offshore locations. In addition, fund fees are lower in countries with stronger investor protection.
This should make 401(k) participants feel better.
Click here to download a copy of the study (PDF 52 pages).