401(k) Investment Menu Costs Decline While Quality Improves

Analysis of 401(k) plan filings from 2013 to 2023 by the CFA Institute Research and Policy Center shows that the average expense ratio of 401(k) investment menus fell from 0.69% to 0.39%, with declines in both active and index fund fees, and the fee gap between small and large plans has essentially closed. Fund quality also improved over the same period, with the weighted average of Morningstar Medalist ratings rising from 3.45 to 3.85, and lower-cost funds often receiving higher ratings.