Investors in mutual funds and exchange-traded funds reaped $5.5 billion in savings last year as asset managers cut costs to battle for their business, according to research firm Morningstar.

Asset-weighted expense ratios for U.S. funds dropped to a record low of 0.48 percent in 2018, from 0.51 percent the year before, Morningstar said in its annual fee study released Tuesday. Investors are paying half of what they were charged 2000, when the firm began tracking asset-weighted fees.

Investors are favoring low-cost passive funds while many actively managed pools are reducing fees to attract capital, according to Morningstar. The “fee war” among fund firms drove investing costs down 6 percent last year, the second biggest decline since 2000, the firm found.

“Asset managers have been cutting fees to vie for market share,” Morningstar said in its study. “Institutions and advisors have increasingly opted against costlier share classes that embed advice and distribution fees.”

The cheapest funds — whose fees rank in the bottom 20 percent and a majority of which are passive — have benefited the most, according to the study. These funds attracted $605 billion of net inflows last year, Morningstar said, while investors withdrew a net $478 billion from the remaining 80 percent of funds in their largest outflow ever.

Vanguard Group had the lowest asset-weighted average expense ratio at 0.09 percent in 2018, followed by State Street Corp. at 0.17 percent and BlackRock’s iShares at 0.3 percent, according to the study. 

While Vanguard, which is known for passive investing, remains the low-cost leader among asset managers, Morningstar said “its competitors have either matched or undercut the firm’s fees for certain broad market-cap-weighted index funds.”

The asset-weighted average expense ratio of passive funds was 0.15 percent in 2018, compared with 0.67 percent for active funds, according to the study. “This means active-fund investors are paying about 4.5 times more than passive-fund investors on each dollar, the widest disparity since 2000,” Morningstar said. 

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Meanwhile, actively managed funds have been under pressure to cut costs as asset-weighted average expense ratios for U.S. funds have fallen every year since 2000, according to the study. 

“Fee reductions by active funds contributed more to falling asset-weighted average fees than they have in years,” Morningstar said.