Expense ratio of mutual funds in U.S. in 2010, 2015, and 2019, with a 2025 forecast

The expense ratio of passive mutual funds is expected to fall more quickly than for active funds between 2010 and 2015. While the former is predicted to fall by around two thirds between 2010 and 2025, the latter is only expected to fall by one third. Active mutual funds are funds of pooled money that is invested by a fund manager, who actively researches new investment opportunities and amends the fund's portfolio accordingly. This contrasts to passive funds, where the fund's portfolio is (usually) determined by an external stock market index such as the Dow Jones Industrial Average or the FTSE 100. The less hand-on nature of passive funds means they are cheaper to operate, hence the consistently lower expense ratio.