Now that I am back in Canada, I see more Canadian financial information. After looking for a Canadian stock index mutual fund, I thought, "why do Canadians buy Canadian mutual funds??".
I searched for "series D" Canadian equity mutual funds, and the minimum expense ratio (MER) was 0.60%. This is quite high compared to US index mutual funds, which are around 0.20% or lower.
Then I searched for Canadian stock index ETFs. The expense ratios are under 0.10%. Here are some samples:
So why would anyone buy a Canadian mutual fund and give up over 0.50% of their return? In today's low return environment, that is a lot. I just don't see the point, am I missing something?
I searched for "series D" Canadian equity mutual funds, and the minimum expense ratio (MER) was 0.60%. This is quite high compared to US index mutual funds, which are around 0.20% or lower.
Then I searched for Canadian stock index ETFs. The expense ratios are under 0.10%. Here are some samples:
So why would anyone buy a Canadian mutual fund and give up over 0.50% of their return? In today's low return environment, that is a lot. I just don't see the point, am I missing something?
Hi Mark,
ReplyDeleteYou can get TD's e-series index mutual funds with MERs in the range 0.33% to 0.50%, but that's still a lot more cost than ETFs. If you can get past the TD employees who do their best to steer you into their extremely expensive funds, the e-series can be a simpler solution for those who are nervous about trading ETFs. Personally, I buy and hold ETFs.
Michael