Mutual fund fees

You directly or indirectly pay fees and expenses when investing in mutual funds. These fees reduce the return you get on your investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition in a mutual fundMutual fund An investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. A professional manager chooses investments that match the fund’s goals for risk and return. You can redeem your fund units at any time.+ read full definition. Not all mutual funds have the same fee structure. You may pay varying one-time sales charges, ongoing management fees and other transactional costs and account feesAccount fees The fees you pay to a financial institution for transactions and other services related to the operation of an account.+ read full definition charged by the fund company depending on which funds you buy, how you buy them and what accounts you hold them in.

Many mutual funds are offered in different series or classes. Learn more

Types of fees and expenses

1. Sales charges

You may pay a sales charge when you buy or sell units or shares of a fund. These sales charges are also known as loads. Funds may be offered with a front-end loadFront-end load A sales fee that you pay at the time when you buy the investment. It reduces the amount you invest. Also called an Initial Sales Charge. Example: Let’s say that you have $1,000 to invest in a mutual fund with a 5% front-end load. You pay a $50 sales fee and invest $950.+ read full definitionback-end loadBack-end load A sales fee that you pay when you sell an investment. Also called a “deferred sales charge.” The fee often goes down the longer you hold onto the investment.+ read full definition, low load or no load. These sales charges are set by the mutual fund companyMutual fund company An investment company that pools money from investors and invests it in a mix of investments, such as stocks, bonds, and money market investments. Most mutual fund companies offer a choice of more than one fund.+ read full definition.

If you have a fee-based accountAccount An agreement you make with a financial institution to handle your money. You can set up an account for depositing and withdrawing, earning interest, borrowing, investing, etc.+ read full definition, you don’t pay a sales charge when you buy and sell funds. Instead, you pay a single client advisory fee (typically negotiated between 1% and 2%) every year to your advisor.

Investors should be aware that as of June 1, 2022, the deferred sales chargeDeferred sales charge A sales fee that you pay when you sell an investment. Also called a “back-end load.” The fee often goes down the longer you hold onto the investment+ read full definition option, including the low load option, is banned. What investors should know about the DSC ban.


1. Front-end load or initial sales charge (ISC)Initial sales charge (ISC) See Front-end Load.+ read full definition– Some mutual funds charge a fee when you buy your units or shares. This is a percentage (up to 5%) of the amount that you are investing in the fund. The fee is paid to the investment firm that sells you the fund. You can negotiate this fee with your advisor.

2. Back-end load or deferred sales charge (DSC)Deferred sales charge (DSC) See Back-end Load.+ read full definition– Some funds used to charge a fee of up to 6% when you sold your units or shares. As of June 1, 2022, the deferred sales charge option is banned. Here’s how it generally worked:

  • The longer you hold a fund with a DSC, the less you’ll be charged when you sell it. The fee declines every year according to a fixed schedule.
  • If you hold it long enough (usually between 5 and 7 years), you won’t pay a fee when you sell your units or shares.
  • Some fund companies may also let you take some of your money (usually 10%) out of the fund each year without charging you a fee.
  • Your advisor’s firm receives commission (usually about 5%) up front from the mutual fund company when you buy the fund. Your advisor receives part of this commission. Any deferred sales charge you pay goes to the mutual fund company.

Although you can no longer purchase new units or shares under the DSC, any units or shares purchased before the ban are still subject to the redemption feeRedemption fee A fee that some mutual funds charge when you sell or redeem units. Unlike a deferred sales load, you pay this fee to the fund (not to a broker). It covers the costs of redeeming your units.+ read full definition schedule, which can be as long as seven years.

3. Low load or low sales charge (LSC)– As of June 1, 2022, this variation of the DSC is also banned. Low load funds generally charged a lower sales charge (up to 3%) when you bought units or shares, and a lower redemption fee (up to 3%) when you sold them. They also had a shorter redemption schedule so you usually wouldn’t have to pay a redemption fee if you held your units or shares for at least three years.

As is the case with DSC units and shares purchased before the ban, any LSC units and shares purchased prior to the ban are still subject to the redemption fee schedule.

4. No load– A no load fund doesn’t charge a fee when you buy or sell its units or shares. A no load fund may not always be a better deal than a load fund. You should compare the MER and performance of each fund before you decide.

2. Other transaction fees

  • Switch fees. A fee which may be charged by a dealer or fund company when you switch from one fund to another within the same fund family. You may be able to negotiate this fee with your advisor.
  • Short-termTerm The period of time that a contract covers. Also, the period of time that an investment pays a set rate of interest.+ read full definition trading fees. A fee that you may be charged if you purchase a mutual fund and then sell or transfer it within a short time period (for example, 30 days).
  • Redemption fees. A fee that you may be charged if you sell your mutual fund within a specified time frame or if you sell above a certain percentage of your investments annually (these types of fees are only applicable to mutual funds purchased before June 1, 2022, under the deferred sales charge option).

3. Account fees

  • Registered plan fees
  • Minimum account balance fees

4.  Fund expenses

The fees and expenses a fund pays are deducted from the fund’s assets before a fund’s returns are calculated and published.

  • Management fees
  • Operating expenses (or a fixed administration feeAdministration fee The fees you pay to a financial institution for activities related to the operation of the account.+ read full definition)
  • Trailing commissionsCommissions What you pay to a broker or agent for their services. Often called a “sales commission”. For example, you pay a fee to someone who buys or sell stocks or real estate for you.+ read full definition(paid from management fees)
  • Trading costs (the fund’s trading costs)
  • Incentive or performance fees (not all funds have this type of fee)

Carefully review the fees and expenses of any funds you are considering, even for no-load funds. Even small differences in fees can translate into large differences in returns over time. You can find information about fees in a mutual fund’s Fund Facts and in its simplified prospectusProspectus A legal document that sets out the full, true and plain facts you need to know about a security. Contains information about the company or mutual fund selling the security, its management, products or services, plans and business risks.+ read full definition. Information about fees for ETFs are in ETF Facts and in its prospectus. By law, a fund company must prepare and file these disclosure documents with the securities regulatorSecurities regulator A government agency that enforces the securities act in jurisdiction it has authority over. This act is made up of laws that establish rules for issuing and trading securities. The Ontario Securities Commission is the securities regulator for Ontario.+ read full definition.

The Fund FactsFund Facts A user-friendly guide that provides key information about a mutual fund including fees and performance. Mutual fund companies are required to give investors a copy of Fund Facts before they decide to purchase a fund.+ read full definition document for a mutual fund must be given to you before or at the time you purchase a conventional mutual fund. For ETFs, the ETF Facts document must be given to you within two days after your purchase. Learn more about disclosure documents.

Self directed investors, or DIY investors should be aware of changes to trailing fees that can impact their mutual funds. What DIY investors should know about the OEO ban.

Costs to consider

1. Management fees and operating expenses (MER)

The fund’s management feeManagement fee A charge that you pay for having an investment professional manage an investment fund. The fee pays the managers for their time and skills. It may also cover things like communicating with investors and doing all the paperwork needed to run the fund.+ read full definition 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.

MERs can range from less than 1% to more than 3%. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. This can add up over time.

The management fee paid to the fund management company includes:

  • overseeing the fund
  • hiring a portfolio managerPortfolio manager An investment professional who manages your investment portfolio. For example, they buy, sell and monitor investments that fit their clients’ goals and tolerance for risk.+ read full definition to make the investment decisions
  • 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

Before you buy a fund, check its MER and performance, and compare them to similar funds. The MER is charged whether or not the fund does well.

2. Trailing commissions

Most mutual fund companies pay a trailing commission (or trailer fee) each year to your advisor’s firm. They pay this commission for as long as you hold the fund. The rate of the trailing commission is set by the fund company.

Trailing commissions for mutual funds and ETFs held in self-directed accounts were banned in Canada as of June 1, 2022. Now mutual funds and ETFs with trailing commissions cannot be offered to self-directed investors (DIY investors).

If you are transferring your assets to a discount brokerageDiscount brokerage A brokerage firm that charges lower fees to buy and sell investments, as opposed to a full-service brokerage. Does not provide investment advice.+ read full definition account, you may be able to transfer your trailer fee paying mutual funds as well. Those holdingsHoldings Shares or other interests in a business. Also refers to investments in a portfolio.+ read full definition will either be automatically switched to trailer free funds or could be subject to a dealer rebate of the trailer fee. Check with the discount brokerDiscount broker A stockbroker who charges lower fees to buy and sell investments, as opposed to a full-service broker. Does not provide investment advice.+ read full definition you are transferring to.

Here’s how it currently works:

  • It’s paid from the fund’s management fee, so it’s reflected in the fund’s MER.
  • It typically ranges from 0.25% to 1.5% of the value of your investment each year.
  • It is to pay for the services and advice the advisor and their firm provide to you.
  • The firm may pay all or part of the commission to your financial advisor.


Top costs:

  1. Management fees and operating expenses (MER) (Paid by you indirectly. Paid out of the fund)
  2. Trailing commissions (included in the MER)


Use this mutual fund fee calculator to see how fees and other costs can affect your investment.


Last updated