Expense ratios for equity, hybrid, and bond mutual funds dropped in 2015 to the lowest level in at least 20 years, while money market fund expense ratios remained at their 2014 low, according to data released by the Investment Company Institute (ICI).

“Mutual fund expense ratios have been experiencing an overall decline for many years, driven by increased competition and growth in the fund industry,” says Sean Collins, ICI’s senior director of industry and financial analysis. “Expense ratios for both actively managed and index funds have seen substantial declines.”

A fund’s expense ratio is the fund’s total annual expenses expressed as a percentage of its net assets. According to Lipper and ICI data, in 1996, the average expense ratio for equity mutual funds was 104 basis points (bps) compared to 68 bps in 2015 (0.68% of assets). For hybrid mutual funds, expense ratios dropped from 95 bps to 77 bps during the same period. Bond mutual funds saw expenses decrease from 84 bps in 1996 to 54 bps in 2015. Money market funds also saw a decline from 52 bps to 13 bps.

Actively managed equity funds expense ratios dropped from 108 bps in 1996 to 84 bps in 2015. For actively managed bond mutual funds the decrease was from 84 bps to 60 bps. In 1996, the average expense ratio for index equity funds was 27 bps, compared to 11 bps in 2015. For index bond funds, expense ratios fell from 20 bps to 10 bps during the same period.

NEXT: Reasons for expense ratio declines

ICI says the growing popularity of index funds contributes to the decline in equity fund expense ratios. Weighted by assets, average equity fund expense ratios fell 2 bps to 68 bps in 2015. This follows a 4 basis point decline in 2014 and marks the sixth straight year in which equity fund expense ratios have fallen. An increase in the share of equity fund assets held in index funds contributed to the decline in equity fund expense ratios: actively managed equity fund assets fell by $275 billion in 2015, while index equity fund assets rose by $109 billion.

In 2015, bond fund expense ratios fell 3 bps, in large measure reflecting a decline in the assets of high-yield bond funds, which tend to have higher-than-average expense ratios. Performance of high-yield bonds suffered in 2015, pushing down the value of funds’ holdings and prompting investor redemptions.

The average expense ratio of hybrid mutual funds, which invest in a mix of equities and bonds, fell 1 basis point to 77 bps in 2015, a smaller decline than stock and bond funds experienced. Hybrid fund assets have increased substantially in recent years, with a portion of that growth occurring among “alternative strategy” funds, which now account for 8% of the assets of all hybrid funds. Alternative strategy funds offer fund investors diversification across a wider range of asset classes and lower correlation with the equity market, but such strategies can be more costly to manage. The average expense ratio for other types of hybrid funds fell 2 bps in 2015.

Money market fund expense ratios averaged 13 bps in 2015, unchanged from 2014. The current low interest rate environment has limited the expense ratios of money market funds over the last few years, as these funds have waived portions of their fees to prevent their net yields falling below zero. In 2015, 98% of money market fund share classes waived at least some portion of their fees. Fund advisers and their distributors pay for these waivers, which totaled an estimated $5.5 billion in 2015.

The average expense ratios for actively managed equity and bond funds fell by 2 and 3 bps, respectively, in 2015, though the expense ratios of index funds have leveled out in the past two years. The declining cost of actively managed funds was due in large part to competitive pressures and investor interest in lower-cost funds.

For both actively managed and index funds, this demand for lower-cost funds is evidenced by the concentration of assets in the very lowest cost funds. In 2015, 57% of the assets of actively managed equity funds were held in the 10% of such funds with the lowest expense ratios. In 2015, 69% of index equity fund assets were held in the 10% of index equity funds with the lowest expense ratios.