Could mutual fund distribution costs in the United States be a bargain? That is one takeaway from a Lipper FMI study written up by the Financial Times.

Lipper found that distribution fees for equity funds in Europe average twice the same cost in the United States.

Specifically, cross-border equity funds paid distributors an average of 70 bps in Europe compared to just 25-35 bps for similar funds in the United States.

Lipper pointed to this difference as one reason for the lower overall cost of U.S. mutual funds compared to their European competitors. Overall costs for U.S. equity funds are 132 bps compared to 198 bps for European cross-border equity funds.

Another reason for the price difference is that the United States has more varied distribution channels and more specific disclosure of marketing fees through 12b-1 disclosures.

Cross-border funds are typically sold by banks in Europe while U.S. mutual funds are distributed through fund supermarkets, brokerages, banks, defined contribution plans and other channels.

Meanwhile, Lipper FMI also found that domestic equity funds in Europe carry lower expenses than cross-border counterparts.

Expenses for funds in the U.K., for instance, average 166 bps and German equity funds carry average expenses of 157 bps. 

Edited by: Sean Hanna, Editor in Chief


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