Mutual fund fees jump five percent as market tanks

Updated

Across the board, investors are paying higher fees for their mutual funds now that the market has tanked. That's according to a new study conducted by MorningStar for CBS MoneyWatch.com, whose Alan Roth has an interesting write-up on the results.

The long and short of it is this: Mutual funds collect their fees based on a percentage of assets under management. So the fact that the market tanked 40 percent reduces revenue by 40 percent, assuming that the expense ratios stay the same. The problem is that expenses don't fall in line with the market, so the mutual funds need to raise fees.