Index Funds Rise to 11.5% of Equity Mutual Funds

The chart above is based on data in the recently released 2008 Investment Company Fact Book from the Investment Company Institute, showing the rise in the popularity of indexed mutual funds from less than 1% of all equity mutual fund assets in 1987 to 11.5% in 2007.

Although the expense ratio for actively-managed equity mutual funds has declined to a record low of 1.02% in 2007 (compared to 2.32% in 1980), that is still 4 times the average expense ratio of .25% for indexed funds, and almost 6 times the expense ratio of the Vanguard 500 Index Fund (data here for index funds).