The Canadian Securities Administrators (CSA) has announced further investigation into the payment of mutual fund trailer fees. These same trailer fees that are built in to mutual fund MER's in Canada (likely the country with the highest mutual fund fees in the world) are banned in the UK and Australia (and for good reason: the enormous conflict of interest).
So ask yourself, why has it taken so long for this to come about here?
Who has the most to lose?
Who controls the mutual fund industry?
But like any fee that you pay, for any service that you get, you have to ask the simple question:
What am I (are we) getting for the fees that I am (we are) paying?
1) Qualitative: Service
If you have similar balanced portfolio combinations, then this may help you to determine a relative comparison for over the same period of time (don't forget to adjust for fees and MER's) and this can help to detrmine alpha for you.
Alpha = Your return (after fees) - (BM- fees&MER)
If your 1 year performance is 2% after fees,
Your Alpha = 2% - (-1.52%)
(remeber that these numbers can/will change on a daily basis so the comparison dates need to be exact for accuracy)
So if you are getting good Aplha and good service, that is the best of both worlds.
If one or both of the components is lacking, you need to ask the question.
What am I (are we) paying for?
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Scott Tomenson,CIM Managing Partner, Chief Investment Strategist