We estimate investors’ attention level to mutual fund fees based on a parsimonious asset allocation model with limited attention in an experimental setting. We find that, on average, investors allocate 62.5% of their full attention to mutual fund fees. We also find that cognitive ability is an important factor in determining investors’ attention to the fees. The estimated attention level implies investors in the U.S. mutual funds market pay $16 billion more in fees per year than the level they recognize. We evaluate policy options to increase attention to fees and find that the policy effectiveness may depend on one’s cognitive ability.

JEL: G41, G11, G23

Keywords: mutual fund fees, limited attention, price complexity, cognitive ability