NEW YORK (TheStreet) -- Good news: Mutual fund investors paid less in fees last year than anytime before, and the savings could continue this year.
Now for the caveat: The fund companies don't get the credit. That goes to investors who have embraced the low-fee gospel, and to last year's soaring stock market.
An assessment from Morningstar, the market-data firm, shows the average investor paid 0.71% in expense ratio last year, down from 0.72% in 2012. While that's not a huge drop, it marks a low point in a steady decline from 0.93% in 1990.
Put another way, for every $100 held in mutual funds, the average investor paid 71 cents in fees last year. It doesn't sound like much, but if the fund earned nothing over 20 years, fees would reduce the $100 to just under $87.
This cost is just as damaging when the fund gains value, but the damage is not as obvious. The larger the fee is, the more harm it does. Over a 50- or 60-year investing career of a 30-year-old who lives to 80 or 90, the drag from fees really adds up.
In calculating fees paid by the average investor, Morningstar adjusts for the size of each fund so one with billions in assets under management has more effect on the average than one with mere millions. The result is a "weighted average."
Morningstar also calculated the "simple average" charged by each fund -- the average of all funds' fees regardless of fund size. Last year it was 1.25%, down from 1.28% in 2012.