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If the return on your mutual funds is satisfactory, why care about the fees you pay?

A reader posed this question recently in an e-mail in which he explained that he generally lives by the premise that you get what you pay for.

“I’m getting double-digit returns year to date on some funds where I’m paying over 2 per cent MER,” he wrote. “That’s okay, I would say.”

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It’s actually quite easy for Globe subscribers to see if the fees they’re paying for funds, as shown in the management-expense ratio, are a good value. Use the ticker search box on Globeinvestor.com to find a profile of your fund, and then click on the premium report link.

The first step in seeing whether your fund fees are providing value is to check how your returns compare in the short, medium and long term with the category average and the benchmark. Consistently beating the average is a very good sign. But the more telling comparison is the benchmark. You can buy directly into many benchmark stock and bond indexes using exchange-traded funds with ultralow fees. A mutual fund that comes close to the benchmark or beats it regularly is impressive.

In one important sense, it’s not particularly fair to compare mutual funds to benchmarks, because most funds devote 0.5 to one percentage point of their MERs to advisers and their firms in the form of trailing commissions meant to pay for service and advice. If you’re getting true advice from your adviser – not just investment management, but also financial planning – that’s also a sign of good value for fees.

The best value in fees comes from an adviser that provides good advice and fund returns that are consistently better than average and at least quite close to benchmarks. A sign you’re getting bad value for your fees? Your adviser has had you in worse-than-average funds for a while and not done a thing about it.

Good service and competitive returns do not mean you give a fund a free pass on fees. In investing, fees are one of the few things in your control when considering future returns. Smart managers can stumble or leave your fund company. Even the best have periods of underperformance. Lower fees help support satisfactory returns, come what may. A strong performing fund with a high MER is a disappointment waiting to happen.

-- Rob Carrick

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Stocks to ponder

Slate Retail Real Estate Investment Trust This REIT could be of interest to investors seeking a high yield. While analysts are forecasting limited price appreciation, the current yield is very attractive - just under 9 per cent. For the first half of 2019, the AFFO (adjusted funds from operations) payout ratio stood at 94.9 per cent. Jennifer Dowty profiles the stock

Shopify This company’s extraordinary rally this year is sputtering amid a stretched valuation, a recent share-offering and a broader reappraisal of strong growth stocks. The retreat over the longer-term is more painful: From its record high on Aug. 27, the share price has fallen 28 per cent, marking the most severe correction for the stock in 3 1/2 half years and erasing more than $16-billion from the value of the Ottawa-based technology company. David Berman looks at what’s going on

CCL Industries Since the company reported weaker-than-expected second-quarter earnings results on Aug. 8, the share price has dropped over $11, or 17 per cent. The stock is now in oversold territory. Concerns surrounding the company’s future sales growth have erased this industry leader’s premium valuation. Yet, many analysts remain bullish on the stock. Jennifer Dowty profiles the stock

The Rundown

Oil prices are skidding, but BMO still sees good things ahead for TSX energy stocks

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Oil prices are sinking again as concerns about the health of the global economy and petroleum consumption replace fears about the vulnerability of Saudi Arabia’s energy infrastructure. But at least one market strategist thinks the positive momentum seen in Canadian energy stocks over the past month can continue even with the pullback in recent days in crude oil prices, which are now nearly back to levels prior to the attack on oil installations in the Middle East on Sept. 14. Read more about it here

How to use ETFs as a buffer in volatile markets

When it comes to investing, how much are you willing to put on the line for the biggest possible gains? If bumpy markets are making you nervous, there is a middle ground emerging between being all-in or sitting on the sidelines. Defined outcome exchange-traded funds (ETFs) offer a buffer against losses - meaning, if the market goes down, you do not necessarily lose money. Read more about these products here

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Wednesday’s Insider Report: CEO and CFO take profits from this top performing TSX stock

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Tuesday’s Insider Report: Director invests over $500,000 in this Big 5 bank stock

Revisiting Canadian energy stocks in wake of Aramco attack

Others (for everyone)

Trump impeachment? History suggests Wall Street ought not worry

Don’t count out value stocks just yet. Here are 6 that would score highly with the investing greats

Globe Advisor

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What’s up in the days ahead

Acadian Timber is a small company with a low profile. But a recent ownership shakeup and the arrival of a new management team provide a couple of reasons to give the stock a closer look. David Berman will do just that.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff

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