A fund’s management fee and operating expenses make up a fund’s management expense ratio or MER. They are paid by the fund and are expressed as an annual percentage of the total value of the fund. The management fee paid to the fund management company includes: overseeing the fund, hiring a portfolio manager to make the investment decisions, and hiring other companies to assist in the administration of the fund. Operating expenses include: bookkeeping and administrative fees, marketing costs, filings with the provincial securities commissions, legal fees, audit fees, custodian fees, and GST/HST.
While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. This means returns are reported net of MER. Information on fees can be found in the latest version of Fund Facts – this document should be available on the fund company’s website or through your financial representative. Learn more about mutual fund fees on GetSmarterAboutMoney.ca.