Canada’s still-world-beating high mutual fund fees

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Robb Engen, Boomer & Echo

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

We’ve been beating this drum for years now but a a new study by the Canadian Centre for Policy Alternatives suggests high mutual fund fees could cause Canadians to delay their retirement by as much as 11 years or else leave them with 40 per cent less money for their retirement.

The study compares the management fees charged by mutual funds and pension plans. It finds that in 2014 annual average pension plan fees were 0.38% of assets while comparable mutual fund fees were 2.1%.

Senior Economist David Macdonald, author of the report, says Canada has the highest equity mutual fund fees in the world:

“They’re so high that in order to offset those fees the average mutual fund investor will have to work until age 72 to match what a pension plan holder made by age 65, even with identical contributions.”

Canadians hold more than $1 trillion in mutual fund investments. This chart shows the largest mutual fund providers in terms of assets under management and compares the average MER of their funds:

Mutual_fund_fees

This follow-up piece by the CBC’s Amanda Lang says it’s up to Canadians to speak up and demand to stop being fleeced by the financial services industry.

In addition to running the Boomer & Echo website, Robb Engen is a fee-only financial planner. This article originally ran on his site on Feb. 28 and is republished here with his permission.

 

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