“The [sales] commissions encourage sales people to favour one product over another based on how much they will get paid, rather than what is in the best interests of the consumer”, says FAIR (The Canadian Foundation for the Advancement of Investor Rights). FAIR recently issued an open letter to the Canadian Finance Minister to tackle high mutual fund fees which it says are harming Canadians’ ability to save for retirement.
“The high cost of owning mutual funds impacts the ability of Canadians to adequately save for their retirement,” FAIR executive director Ermanno Pascutto wrote in the letter. “Better investor protection in securities regulation including increased price competition in Canada would be of benefit to millions of Canadians.”
The report found that the median asset weighted expense ratio for fixed-income funds is 1.31% compared with 0.75% in the U.S. The expense ratio for equity funds in Canada is 2.31% compared with 0.94% in the U.S., while investors in money market funds will pay 0.8% compared with 0.47% in the U.S.
What can you do about the high fees? Avoid them, avoid purchasing investments with high fees. I’ve written about the high cost of mutual funds fees before, and the solution is to invest on your own. No one cares more about your money than you do. So you owe it to yourself to learn how to invest responsibly, learn how to invest in quality companies when they are undervalued, and save thousands of dollars in fees in the process.
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