What does MER mean?

• management fee (including a trailing commission for advice and service, if applicable) 
• operating expenses (recordkeeping, accounting costs, legal and audit fees, report preparation, marketing and more) 
• taxes 

The MER is expressed as a percentage of the fund’s assets. MERs range from under 1% to over 3%. Investors don’t pay the MER directly—it’s paid by the fund—but it does reduce their return on investment. 

The published rates of return you see for mutual funds and ETFs are the rates after their MERs have been deducted. For example, if a fund’s return before fees was 8% and the MER was 1.5%, the reported investment performance would be 6.5%. 

MERs are typically lower for ETFs than mutual funds because ETFs have lower management and operational expenses and are more likely to be passively managed (many of them mimic a benchmark index), rather than actively managed. MERs are charged no matter how well a fund performs. 

MERs vary from fund to fund. So, read the fine print on your investments to truly know what the costs are.

Example: “Pat has been comparing the MERs of the mutual funds in their portfolio, as they’re planning to make changes as they near retirement age.”

Read more on MERs and investing:

• A guide to the best robo-advisors in Canada
  Find out which robo-advisor is right for you. We list all the criteria you should be looking at, including fees (MERs), minimum account size, balanced portfolio return and more.

• Canadians are still paying too much in investment fees
  Millennials and Gen Z missed the memo on how much management fees erode returns over the long term, according to a new Questrade survey.

• Best ETFs in Canada
  Back for the 10th edition, our star panellists reveal their top 48 picks among Canadian, U.S., international, fixed income and all-in-one exchange-traded funds.

• Switching to lower-cost investing
  Would you like to build a larger, more sustainable nest egg without taking more market risk?

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MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.

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