WHAT WE'RE UP TO
Outing widely held mutual funds with fees that have increased in recent years. There's an industry-wide trend toward lower fund fees, but it would be a mistake to just assume all funds are getting cheaper to own.
We start with all mutual funds that have five years of history. Next, we compare their most recently reported management expense ratios with their MERs from five years ago. The list below shows you the biggest MER increases over the past five years among funds with assets of more than $500-million.
SO WHAT DID WE TURN UP?
Lots of instances where fund companies have been quietly bumping up the fees on some of their popular products. Scotia Canadian Dividend is the biggest fund in the Scotia Securities family and it has been made significantly more expensive to own in the past five years. Same goes for CIBC Monthly Income.
In fact, 12 of the top 20 funds on our list have assets of $1-billion or more. That tells you a lot of investors have been paying increasing amounts to own their funds at a time when there are lots of funds dropping their fees. How big a deal is this? It depends on the context.
Scotia Canadian Dividend was a good performer in the past five years, bested only by TD Dividend Growth among big bank dividend funds. More importantly, the fund is still the cheapest to own of its bank fund peers. AIC Advantage's MER increase is small, but it stands out if you're a unitholder who lost 21.8 per cent in the 12 months to March 30.
The results of today's screen suggest that investors who care about fees - and every sentient investor should - need to be doubly vigilant. First, they should compare the MER of a fund they're considering against its peers. Second, it's worth a look at the trend for the MER - has it been coming down in recent years, or is it rising? A rising trend is not your friend because it means a company is digging deeper into the returns generated by its funds to pay itself, and not you, the client.
Funds with increased MER
|Company||Category||Assets ($million)||Last reported MER (as of Feb. 2003)||MER||Last reported MER (as of Feb. 2008)||MER||% change|
|Scotia Canadian Dividend||Canadian Dividend and Income Equity||2,205.80||12/31/02||1.21||2/29/08||1.67||38|
|Standard Life Cdn Dividend Growth-A||Canadian Dividend and Income Equity||2,068.70||2/28/03||1.5||2/29/08||1.93||28.7|
|CI Short-Term Corporate Class||Canadian Money Market||704.3||12/31/01||0.97||2/29/08||1.2||23.7|
|CIBC Monthly Income||Canadian Equity Balanced||6,739.50||2/28/03||1.18||8/31/07||1.42||20.3|
|Scotia Canadian Income||Canadian Fixed Income||1,068.60||12/31/02||1.23||2/29/08||1.47||19.5|
|Scotia Canadian Balanced||Canadian Neutral Balanced||2,083.90||12/31/02||1.75||2/29/08||2||14.3|
|Manulife Money Fund - D||Canadian Money Market||621.2||12/31/02||1.38||12/29/06||1.55||12.3|
|CI Money Market||Canadian Money Market||1,055.80||12/31/01||0.95||2/29/08||1.06||11.6|
|TD Monthly Income||Canadian Equity Balanced||4,543.10||2/28/03||1.28||2/29/08||1.41||10.2|
|Beutel Goodman Canadian Equity||Canadian Equity||735.2||2/28/03||1.36||9/28/07||1.43||5.1|
|MD Growth||Global Equity||3,221.50||2/28/03||1.37||12/31/07||1.44||5.1|
|TD U.S. Quantitative Equity-I||U.S. Equity||571.4||2/28/03||1.46||2/29/08||1.53||4.8|
|PH&N Canadian Money Market-A||Canadian Money Market||677.1||12/31/02||0.47||2/29/08||0.49||4.3|
|AIC Advantage||Canadian Focused Equity||820.2||2/28/03||2.4||6/29/07||2.5||4.2|
|TD Canadian Bond||Canadian Fixed Income||8,660.10||2/28/03||1.02||2/29/08||1.06||3.9|
|TD Short-Term Bond||Canadian Short Term Fixed Income||1,725.80||2/28/03||1.02||2/29/08||1.06||3.9|
|CIBC Canadian Equity||Canadian Equity||553||2/28/03||2.15||8/31/07||2.23||3.7|
|MD Equity||Canadian Focused Equity||2,334.60||2/28/03||1.36||12/31/07||1.41||3.7|
|MD Balanced||Canadian Equity Balanced||532.8||2/28/03||1.36||12/31/07||1.41||3.7|
|MD Dividend||Canadian Equity Balanced||1,374.80||2/28/03||1.36||12/31/07||1.41||3.7|
|CIBC Money Market||Canadian Money Market||4,798.80||2/28/03||1.12||6/29/07||1.16||3.6|
© 2007 The Globe and Mail. All rights reserved.
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