# "D Series" mutual funds...



## Siwash (Sep 1, 2013)

Hey folks, just read this in the Globe. What are your thoughts? How does this compare to investing in something like the Couch Potato model TD e-Series? This is targeting the DIY. The MERs seem high but they article claims this is less volatile.

http://www.theglobeandmail.com/glob...diy-investors-can-get-behind/article15689088/


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## AltaRed (Jun 8, 2009)

D series mutual funds simply are lower (MER) cost versions of the A series funds and are available, to my knowledge, only at discount brokers....and perhaps through certain direct channels.

A series funds pay fat trailer fees to "full service" financial advisors and brokers for the advice provided to the client. But wait a minute.... discount brokers cannot provide advice to the client so why on earth should discount brokers be permitted to collect that fat trailer? Indeed, why should discount brokers not sell F class (no trailer fee) mutual funds to us? As you can imagine, discount brokers would lose a revenue stream and have resisted that for at least a decade.

That said, not so many years ago mostly as a result of RBC buying PH&N I think, RBC Direct Investing started, with their in-house mutual fund families, a new class of mutual fund called D series, with a reduced trailer fee, i.e. somewhere in between the fat A series trailer fees and the zero F class trailer fees. As the G&M attests, other companies are having to follow suit to avoid RBC DI getting a disproportionate share of the mutual fund business with their in-house mutual funds. 

Bottom line is we retail investors cannot buy F class mutual funds, at least not yet, on our own, but Class D is a step in the right direction. There is no difference in the fundamentals of the same mutual fund e.g. RBC Dividend Fund, whether Class A, Class D or Class F other than MER costs.


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## Guban (Jul 5, 2011)

D Series is a good idea. E series, an even better one. The D series funds are actively managed, whereas the E series are index funds and therefore have an even lower cost.

The brokerages will not give us F series because they won't get paid under the current model, so the D series is a reasonable compromise. As the Globe article points out, D series can have their place in a portfolio. The D series funds are not necessarily less volatile, but instead depends on the underlying fund. All in all, it is a step in the right direction.


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## dubmac (Jan 9, 2011)

Guban said:


> D Series is a good idea. E series, an even better one. The D series funds are actively managed.


I hold Mawer Balanced (MAW104). It has a low MER (0.98), and has all their funds bundled up - Foreign, Cdn, and Int'l equity along with 30% Bond fund and their heralded New Canada Fund. The fund has done well recently, but my measure of success is how well funds do over the 5-10 yr horizon, and how well they keep their managers. MAW014 has been a good balanced for me in my (& my wife's and spousal) RRSP.


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## Beaver101 (Nov 14, 2011)

Guban said:


> D Series is a good idea. E series, an even better one. The D series funds are actively managed, whereas the E series are index funds and therefore have an even lower cost.
> 
> The brokerages will not give us F series because they won't get paid under the current model, so the D series is a reasonable compromise. As the Globe article points out, D series can have their place in a portfolio. The D series funds are not necessarily less volatile, but instead depends on the underlying fund. All in all, it is a step in the right direction.


 ... While the D series versus the A series is considered a good idea because of the claim to lower MERs for the D series, however, the prices of the D series are higher than the A series such that the savings on the difference in the MERs are not as straight as claimed. E.g. compare the D series of say the RBC Bond fund with the A series (and include distributions) .. the savings at the end of the year, isn't as significant or to the extent of the difference in the MERs as claimed. Are DIY with the D series funds actually saving on the difference of the MERs eg. 1% say? I don't think so or perhaps my math is off - it would be good if those DIYrs currently in the D series can clarify otherwise.


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## Guban (Jul 5, 2011)

dubmac said:


> I hold Mawer Balanced (MAW104). It has a low MER (0.98), and has all their funds bundled up - Foreign, Cdn, and Int'l equity along with 30% Bond fund and their heralded New Canada Fund. The fund has done well recently, but my measure of success is how well funds do over the 5-10 yr horizon, and how well they keep their managers. MAW014 has been a good balanced for me in my (& my wife's and spousal) RRSP.


As the Globe article indicates, funds from companies such as Mawer can't be purchased from RBCDI because it doesn't pay trailers. Do you hold it directly with Mawer?


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## Guban (Jul 5, 2011)

Beaver101 said:


> ... While the D series versus the A series is considered a good idea because of the claim to lower MERs for the D series, however, the prices of the D series are higher than the A series such that the savings on the difference in the MERs are not as straight as claimed. E.g. compare the D series of say the RBC Bond fund with the A series (and include distributions) .. the savings at the end of the year, isn't as significant or to the extent of the difference in the MERs as claimed. Are DIY with the D series funds actually saving on the difference of the MERs eg. 1% say? I don't think so or perhaps my math is off - it would be good if those DIYrs currently in the D series can clarify otherwise.


It looks like the difference in MERs is closer to 0.5-0.3%, and the returns listed do support the lower costs. I understand that most equity funds pay trailers of the 1% that you mention. D series funds look like they pay 0.25%, so perhaps the A series pay less, or something else is going on.


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## dubmac (Jan 9, 2011)

Guban said:


> Do you hold it directly with Mawer?


I invest thru MD Management - they offer access to most MF fund companies and products.
MAW104 is mentioned by Carrick in the following article http://www.theglobeandmail.com/glob...n-one-the-portfolio-in-a-box/article14849079/


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## AltaRed (Jun 8, 2009)

Beaver101 said:


> ... the savings at the end of the year, isn't as significant or to the extent of the difference in the MERs as claimed. Are DIY with the D series funds actually saving on the difference of the MERs eg. 1% say? I don't think so or perhaps my math is off - it would be good if those DIYrs currently in the D series can clarify otherwise.


Sure they are. Compare the direct differences (gains/losses) on a percentage basis between each of D series and A series at the end of each year. The percentage difference will be the MER difference, whether it is 0.25%-0.5% or some other number. Trailer fees on mutual funds vary depending on whether it is equity (more likely ~0.5 delta), or balanced (something less), or bond (more likely ~0.25 delta). D series NAV prices of the same fund will diverge with A series over time due the savings in MER costs. In 20 years, the NAV differences between A and D series of the same equity funds in particular will be substantial.


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