Investors, in aggregate, are paying less for mutual funds and exchange-traded funds (ETFs). According to Morningstar, the asset-weighted expense ratio for all funds was 0.64% last year, down from 0.76% five years ago.

Preferences have shifted in favor of index funds and other low-cost funds. Morningstar calculated that 95% of all cash inflows over the last decade went to funds whose expense ratios rank in the lowest 20% of all funds. Passive funds, which had an average asset-weighted expense ratio of just 0.20% last year, were the big beneficiaries of this shift. (Not mentioned specifically in Morningstar’s report was the fact that ETFs, which are predominantly passively managed, grew at an exponential pace over the last five and 10 years.)

Dollars are also flowing to lower-cost share classes. The use of wrap accounts by advisers to bundle individual accounts has increased access to lower-cost institutional share classes. Similarly, growth in 401(k) plan assets has resulted in more savings invested in institutional share classes. At the other end of the spectrum, load shares, which charge a fee for buying or selling, held just 20% of all assets at the end of last year versus 37% in 2004.

At the same time, the extended bull market has caused the portfolios of many investors to grow to a point where they qualify for breakpoints on fees. Nearly half of all funds charge discounted fees when an investors’ assets exceed a specified level.

Some fund companies have reduced expenses. Morningstar says 63% of mutual fund share classes and ETFs in existence for at least five years reduced their expense ratio between 2009 and 2014. Yet industry revenues are at a record. Providers of mutual funds and ETFs realized $88 billion from fees last year, compared to $50 billion 10 years ago, thanks to growth in assets under management (AUM). Because companies realize revenues by assessing a percentage fee on assets managed, growth in investors’ portfolios means more revenues for the fund companies.

Source: “2015 Fee Study: Investors Are Driving Expense Ratios Down,” Michael Rawson and Ben Johnson, Morningstar.