Fund Expenses Impact Your Investment Experience

From this article on the Morningstar Advisor website we learn that after years of steady declines, fund expenses are actually no longer falling, and in some cases, they're actually rising.

From 2003 through 2006, the average mutual fund investor's expense ratio bill fell from 1.00% to 0.90%. That's a huge savings and was a long overdue sharing of the economies of scale that the advisors and the fund industry had been keeping to themselves.

However, in 2007 the average expense ratio stayed at 0.90% and costs in some broad asset classes actually rose. We saw expense ratios on the rise in balanced and municipal-bond funds. Domestic equity and taxable-bond funds dipped by 1 basis point. Only international-equity funds, which enjoyed a surge of popularity in recent years, enjoyed a meaningful drop of 4 basis points. (Exchange-traded funds were not included in the study.)

However, the most important piece of information comes in the last sentence of the 1st paragraph:

That's bad news because we've found that costs are the best predictors of future returns.

I agree that costs can have a big impact on future returns, and while you can't control what the market's going to do, you can certainly exert control over your costs.  I think it's smart to do so.