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How do I know how much I'm actually paying in mutual fund fees?

Nancy Woods, adviser with RBC

Deborah Baic/The Globe and Mail

Dear Nancy Woods,

I often hear and read about the MER on my mutual funds. They are expressed as a percentage but how do I find out what I have actually been charged?

Signed Vanessa

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Dear Vanessa,

You are correct in that the management expense ratio, or MER, is disclosed as a percentage of the fund. The amount of the MER that is specifically charged to your mutual funds is available on the various mutual fund companies' websites.

You can also go to and look up your individual mutual funds and find out the MER for each. Then take that figure and multiply it by the market value of your holding.

For example, if you own fund XYZ that has an MER of 2.6 per cent and it has an average market value of $50,000 for the year, the cost that is deducted from the unit price for one year ($50,000 x 2.6%) is $1,300.

For comparison, assuming the same market value, the annual cost on an exchange traded fund (ETF) with an MER of 0.20 per cent would be $100.

There is a significant cost difference. But I will point out that there are very different investment strategies and methods between active and passive managed funds.  The active managed fund can be constantly changing with many decision makers behind it to achieve better-than-average results. Investing using a mutual fund can be a good way to invest in markets or countries that we are not familiar with.

The investment style and process of a mutual fund manager can also affect the MER. A fund manager that frequently changes the fund's investment positions will incur higher costs. The market volatility can play a major role in this. If the markets are extremely volatile, the market swings can trigger stop-loss orders or sell triggers with a higher frequency than when the markets are less volatile.  Shareholders with a bearish view can increase the redemption requests and force a manager to raise high amounts of cash to satisfy those requests. There are a myriad of reasons for a higher-than-average MER, but in the end it could be justified by above-average returns.  The key is to do the research to find out which funds can give you them.

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The passive ETF does incur a commission cost to buy, and then again to sell, unless it is held in a fee-based account. The holdings within an ETF may not change at all during a year. Because an ETF is a closed-end fund, meaning the pool of monies doesn't change, it does not have the cash-flow issue.

It is a good idea that you have a clear understanding of what you are paying for your investments and annually assess if you are getting your money worth.  Some mutual funds are worth paying the higher MER for, some are not.


Nancy Woods, CIM, FCSI is an Associate Portfolio Manager and Investment Advisor with RBC Dominion Securities Inc.  To subscribe to her newsletter, visit her website  To ask her a question, send an email to

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About the Author

Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. More


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