But it's not because fund companies are lowering the charges. By Nellie S. Huang, Senior Associate Editor June 1, 2012 The good news: Average mutual fund fees were lower in 2011 than the year before. The bad news: It’s not because companies are charging less. Rather, investors are choosing lower-cost funds. SEE ALSO: Our Special Report on How to Be a Better Investor According to an Investment Company Institute study, stock funds cost investors an average of 0.79% last year, 0.04 percentage point less than in 2010. That’s lower than the figures you typically see—for example, 1.29% as the average for diversified U.S. stock funds—because the ICI weights funds by assets to calculate its figure. A behemoth such as Vanguard 500 Index (VFINX), with $114 billion in assets and a 0.17% expense ratio, counts far more than a small fund that may charge higher fees. The ICI’s comparable figure for bond funds, 0.62%, is down from 0.64% in 2010. One explanation for the fee drop is that investors have been taking money out of actively managed stock funds and putting it into stock index funds and bond funds, both of which typically charge less. The average expense ratio for index funds in 2011 was just 0.14%, according to the ICI study. In addition, there’s more money in 401(k) plans, which often have access to lower-cost institutional funds. Fees have been trending down for nearly a decade. In 2003, the average stock fund cost investors 1% a year for expenses. ORDER NOW: Buy Kiplinger’s Mutual Funds 2012 special issue for in-depth guidance on the only investments you need.