There are plenty of good mutual funds with below-average expense ratios to choose from in the universe. Therefore don't settle for expensive when you can have inexpensive AND high quality! Here is a breakdown and comparison of average expense ratios for basic fund types:
Large-Cap Stock Funds: 1.25%
Mid-Cap Stock Funds: 1.35%
Small-Cap Stock Funds: 1.40%
Foreign Stock Funds: 1.50%
S&P 500 Index Funds: 0.15%
Bond Funds: 0.90%
Never buy a mutual fund with expense ratios higher than these! Notice that the average expenses change by fund category. The fundamental reason for this is that research costs for portfolio management are higher for certain niche areas, such as small-cap stocks and foreign stocks, where information is not as readily available compared to large domestic companies. Also index funds are passively managed. Therefore costs can be kept extremely low.
Note: These averages are what I would call "close approximations" and were taken directly from my Morningstar mutual funds software. You can also find similar numbers on most mutual fund research sites.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.