Cost matters and many more people are starting to examine the costs of their investment portfolios, sometimes finding nasty surprises. Every now and then a financial commentator will write an article indicating that actively managed funds with MERs over a certain number should be tossed out of an investor’s portfolio. Usually the article will state 2% for domestic-mandated funds and maybe 2.50% for funds that invest outside of North America.
There’s High, And Then There’s HIGH!
Just for fun, I decided to use Globefund.com to look up funds with the highest MERs that are RRSP eligible. I’ve listed all the funds with MERs over 8%, but note that many of the funds have performance bonuses – for example, they may charge a set management fee, but have a performance bonus of 20% of the excess returns generated over and above a benchmark – which can lead to these astonomical MERs.
Many of the funds fall into the LSIF category which may or may not have performance bonuses, as well as stiff base fees. Many investors have been burned by investments in Labour Sponsored Investment Funds – being locked into funds for 8 years to avoid clawing back of the tax savings they earned for first investing in them. Many investors can be lured by the dangling carrot of extra tax savings, but it’s important to pick your investments based on their mandate and fundamentals first.
Funds with MERs Over 8%
|Dynamic Power Hedge Fund-F||13.94%|
|Dynamic Power Hedge Fund-A||12.63%|
|Dynamic Power Emerging Markets||11.24%|
|DMP Resource Class||10.44%|
|VenGrowth III Invst Fd Inc.Cl-A SrA||9.99%|
|VenGrowth III Invst Fd Inc.Cl-A SrB||9.99%|
|VenGrowth III Invst Fd Inc.Cl-A SrC||9.93%|
|Front Street Energy Gw Fund Ser-III||8.89%|
|VentureLink Brighter Future V||8.47%|
|Stone & Co. Longevity Global Div C||8.44%|
|GrowthWorks Cdn Income II||8.31%|
|GrowthWorks Cdn Diversified II||8.28%|
|Stone & Co. Longevity Global Div B||8.27%|
|VentureLink Brighter Future IV||8.27%|
|VentureLink Brighter Future III||8.26%|
|GrowthWorks Cdn Growth II||8.24%|
|Sprott Bull/Bear RSP (08/29)||8.24%|
|GrowthWorks Cdn Financial II||8.21%|
|GrowthWorks Cdn Balanced I||8.18%|
|GrowthWorks Cdn Growth I||8.10%|
|GrowthWorks Cdn Diversified I||8.07%|