Low Cost.
The advertised fees (MERs) for mutual funds in Canada are among the highest in the world, averaging 2.6%. But the costs of holding mutual funds are even higher. A recent study pegs the total cost for holding mutual funds in Canada at 3%.
Sales Charges
Sales charges differ for each fund. Sometimes the investor is charged when they buy the fund. These up-front charges are typically in the 1-3% range. In other cases, the buyer agrees to be "locked in" to a particular fund company for a given period of time (sometimes as long as seven years). If the investor sells before the expiry of that agreement, they pay a "Deferred Sales Charge" (DSC). These DSC charges generally start at around 5% and decline to zero over the DSC period.
Transaction Costs
The advertised MER does not include the underlying transaction costs. These are the commissions that the mutual fund pays when it buys and sells securities. The actual amount charged will vary depending on how actively the given fund is traded. These costs are all passed on to the investor.
Polaris Financial: Low Cost
At Polaris Financial, there are no up-front charges and no deferred sales charges. If you are price shopping, make sure to ask about MERs, transaction costs and other hidden costs such as custodial fees and HST.