Mutual fund investing: There’s a fee for that? | Jan 9, 2017
Posted in: Investment,
A management expense ratio (MER) is the total* fee you will pay to invest in a standard series mutual fund. It’s important to note that you do not pay the MER directly; rather it’s paid by the fund itself, which reduces the value of your investment accordingly.
How your money gets split out in an MER
You invest $10,000 in a standard series of a typical Canadian balanced fund with an MER of 2.5 per cent. Through the fund you pay a total of $250 in fees for the year, which may be broken out as follows:
$121 for the professional management of the fund and fund operating expenses
$29 for taxes
$100 fund dealer commission for administration compliance and oversight provided by the fund dealer, of which a portion goes to investment representatives for the services provided to clients, including financial advice and overhead expenses incurred by the firms providing those services.