Saturday, July 8, 2017

Why Do Canadians Buy Canadian Mutual Funds?

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?

1 comment:

  1. Hi Mark,

    You 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.



Comments are not moderated prior to posting. Mark