$10 Trillion in Mutual Funds Go on Sale

As the recession took hold, plenty of retailers cut prices. Now some fund companies are discounting their offerings.

The Schwab S&P 500 Index Fund(SWPIX Quote) reduced its annual expense ratio from 0.36% to 0.09%, while DWS Investments is lowering sales charges on some bond funds from 4.5% to 2.75%. Hedge funds are also cutting costs. According to HFR Group, hedge funds charged an average annual management fee of 1.57% in the first quarter, down from the standard 2%.

The fee reductions could be a sign of things to come. John Bogle, founder of Vanguard Group, argues that the entire financial sector -- including funds, brokers and banks -- will be forced to cut costs. Too much of the nation's wealth has gone to support excessive profits by financial companies, says Bogle, who has long championed low-cost index funds. Now financial companies will face lower profit margins. ...