Looking back, our analysis shows that expense ratios have declined across virtually all investment categories, with the largest reductions generally occurring in categories that had the highest initial costs over the last decade. We also find evidence that fund quality has improved, although the gains have been more modest than the reductions in fund expenses.
The analysis further suggests that smaller plans have made meaningful progress in narrowing the gap with larger plans. Investment expense ratios are now relatively similar across plan sizes. However, smaller plans still tend to slightly lag larger plans in fund quality.
Looking ahead, while passive strategies are likely to remain foundational components of DC menus, there are potential growth opportunities for differentiated active investment capabilities, such as managed advice, retirement income, private markets, and custom solutions.
