A MER above 1. Here are three strategies to lower the MER on your investments. Mutual funds are actively managed by their fund managers, who may do considerable research on individual stocks and bonds and regularly increase or decrease exposure to certain sectors or securities. This active management is expensive. Added to this, Canadian investors pay some of the highest mutual fund fees in the world.
The trailer fee that is buried in the MER of many mutual funds is an ongoing payment to your financial advisor. Rear-end load funds usually pay an annual 0. Not only do these trailer fees increase your MER, but they reward your advisor when you continue to hold the same investments, even when this may not be in your best interest. Fortunately, you can often purchase F-class mutual funds, which have no trailer fee. These firms, such as Bellwether Investment Management , offer bespoke, specialized investment services.
Instead of being paid by trailer fees or sales commissions, the investment team and advisors at a private investment management firm are paid directly by their clients. Not only does this compensation approach save you money relative to typical MERs, it offers complete transparency on fee structure and will encourage your financial professional to act in your best interests, since she or he is being paid by you, not the mutual fund manufacturer.
The percentage you pay your investment manager may also be negotiable. In conclusion, the fees you pay for investment products and services will have a significant impact on whether you are successful in achieving your investment goals over the long term. Responsible investing What are MER fees? The most common types of series offered are: A-series : Funds offered by full-service advisors but available to online brokerages as well.
D-series : Funds available to do-it-yourself investors through online brokerages. F-series : Funds available to investors who have a fee-based arrangement with a full-service advisor, whereby they pay the advisor directly for their ongoing professional advice. F-series funds have lower MERs because they do not include a separate fee for advice.
Qtrade Investor clients have exclusive access to F-series funds from NEI Investments as well as from Vanguard Canada, regardless of whether you work with an advisor. Instead, the fee for advice, access and service is charged directly to the investor by the firm the advisor works for.
For illustrative purposes only. Access to the advanced skills and specialized education, experience and professional designations of the portfolio manager and their team of analysts if there is a team to support. The fund manager and analysts have access to research reports, company executives, competitor information, market data, specialized analysis tools, proprietary tools and other important data.
Mutual fund managers and analysts dedicate their professional lives to researching and analyzing current and potential holdings for the mutual fund allowing investors to enjoy their time doing something else. There are different ways to access and pay for advice depending on the series you invest in. Compensation is paid to the investment dealer organization and financial advisor trailing commission who sell the fund and provide ongoing financial advice and service to the investor. The expertise an advisor provides to an investor, including building financial plans, goal-specific planning, tax planning, fund recommendations, portfolio construction and monitoring and rebalancing.
MERs are paid indirectly as they are automatically deducted from a mutual fund. For example:. The MER typically represents the majority of the costs charged to the fund, but not all.
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