# MER fees in RBC



## NicW11 (Mar 3, 2012)

How do I determine my MER fees in my RBC investments. We have a whack tied up in mutual funds that I need to take control of and we have decisions to make. I've been much to passive an investor and am finally realizing that I need to put a heck of a lot more effort into my portfolio. 

We receive quarterly statements, but I assume the management fees are build right in somehow because there is no mention of fees anywhere. 

Thx, Nic


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## mind_business (Sep 24, 2011)

http://fundinfo.rbcgam.com/mutual-funds/rbc-funds/prices/default.fs

Click on the individual Funds to get more details ... including the MER.


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## NicW11 (Mar 3, 2012)

Thanks for that link, very helpful. So now, dumb question... how do they get their money? For example, I own RBC Canadian Dividend Fund which has an MER of 1.77%. I don't see anywhere on the stmts that says this has been charged. Is it built right in and comes off before I receive any profit?

The value of this particular fund is $15,000 app, does that mean that I'm getting charged about $265 a year for them to _manage_ it?


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## CanadianCapitalist (Mar 31, 2009)

NicW11 said:


> I don't see anywhere on the stmts that says this has been charged. Is it built right in and comes off before I receive any profit?
> 
> The value of this particular fund is $15,000 app, does that mean that I'm getting charged about $265 a year for them to _manage_ it?


Yep.


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## indexxx (Oct 31, 2011)

NicW11 said:


> The value of this particular fund is $15,000 app, does that mean that I'm getting charged about $265 a year for them to _manage_ it?


Yes, and that's regardless of performance. So even if the fund drops or stays the same, they still collect their percentage. I'm just in the process of ditching an MF with an MER of 2.55%, so at its current value of $28,000, I'd pay them $714/year or $59.50 per month. For a return of about 4% averaged over five years.


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## humble_pie (Jun 7, 2009)

funds withdraw their fees in tiny daily increments from cash that is always available, so the fund unit owners never notice any significant fee withdrawal.

the true story, however, is even more discouraging. If the stated MER is 1.77%, then the fund unit owner is probably paying something north of 2%. This is because the portfolio commissions are not included in any MERs.

these are the commissions to buy & sell the securities held within the portfolio. Their amount in dollars will be expressed in the Notes to the financial statements. One can convert that amount to a ratio by comparing it to the total assets under management in the fund.

normally, fund commissions range from very low for a bond fund to as high as 1% for an extremely aggressive small cap fund. For a dividend fund, i would expect commissions somewhere just under half a percent.

how does mr or mrs fund owner actually pay these commissions ? via purchases & sales of securities within the portfolio. These are booked in at costs of securities purchased - ie raw costs plus commissions - & cash realized from disposition of securities - ie raw proceeds minus commissions.

i for one would never hold even a dividend etf. I would hold the eligible dividend paying stocks outright. There is zero management fee. All of the tax consequences are known upfront. Pure & simple.


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## NicW11 (Mar 3, 2012)

Wow, this makes me want to be ill. I had no idea. If I can assume that all our RBC mutuals are about the same, we are paying over $5,000 a year in management fees. The kicker is these investments have returned about 4% since 2003. RBC made more money 'managing' our money than we did.

Ugg, I guess this is good; knowlege is power right? Until recently, I just assumed my RRSP savings option was to give my money to the bank for safe keeping, now I realize what a mistake we've made. 

Ok, so I need more advise than I thought I would...what are our options with this money tied up in RRSP's at RBC? Where do I begin to look. I feel a little lost at the moment, so any advise to get me hunting is appreciated. We have a meeting with our F/A at RBC Thurs evening, and I certainly will be cancelling our current monthly contributions.


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## MoneyGal (Apr 24, 2009)

It's going to be OK. 

The first thing you're going to want to know is whether there are deferred sales commissions on the funds (which mean you have to pay a fee to transfer out). If you post the specific fund names, including any codes after the fund name, we should be able to tell you whether there are DSC fees on those funds or not. 

You haven't said anything about what your goals are, what your asset allocation is, why that asset allocation, etc. Right now, you are just finding out about the costs. But if you were to move the funds to lower-cost alternatives, where would you go? Do you know? Do you know how you find out, if you don't know now?

Really briefly, it sounds like you are planning to become a DIY investor (that's where the true cost savings are). That means developing your own investing plan and moving your assets to a brokerage (there are many alternatives) where you can execute your own trades. 

This is very different from the approach you have now, but you can get lots of information and advice along the way, if that's what you choose to do. Welcome! You're potentially on the start of a very exciting and fulfilling journey.


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## humble_pie (Jun 7, 2009)

it's true the light bulb is a bit shocking, but you have been in the company of millions of canadians who buy mutual funds so please do not feel bad for one second.

imho there is no fast n easy solution to what is a perfectly normal desire to escape paying those management fees. 

at the far end of the tunnel the light says buy stocks outright, or it says buy etfs or index funds outright. Zero management fees & low management fees respectively.

but getting there is hard. There is a great deal to learn. Everywhere in cmf forum are messages mentioning good books to read. This forum is a excellent place to learn, if you can manage to ignore the chaos. Good blogs are canadian capitalist & million dollar journey (links at bottom of this screen) as well as canadiancouchpotato dot com.

all may seem overwhelming & indeed managing one's own portfolio is a huge responsibiliity. Fortunately there are fairly easy ways to do it, ie couch potato or sleepy potato methodologies.

turning now to your upcoming meeting with the FA, i for one tend to believe you will want to continue with your existing funds for a while longer, in order to give yourself the calm & orderly time you will need to create sound plans for do-it-yourself portfolios. Translation: please don't jump on him, he cannot help the way the industry is structured, & you are probably going to need his goodwill for a while longer.


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## NicW11 (Mar 3, 2012)

Hi MoneyGal, you hit the nail on the head. We are certainly interested in becoming DIT investors. 

As you can tell I'm new here - Hello all! Have been lurking for a month and so happy to have found it and all of the informative views on here.

Quick background - I'm 42, husband 47. We are recently mortgage free and have (almost) no debt. We are in the position now to contribute about 2500-3000 per month to investments, which is what got me researching investment avenues. We only own a small amount of stocks right now (about 15,000) both in energy. The rest of our investments are in mutuals b/c I thought thats what a person was suppose to do to save for retirement. We've always said we weren't happy with the banks in terms of investing but never really could back up why. I guess now I know why.

I will post our specific RBC funds later tonight to see if I can determine what type of fees.
Thanks again.


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## Square Root (Jan 30, 2010)

Wow. The industry has obviously done a terrible job here. I am not surprised about these particular investors as clearly there are millions like them. Hard to believe people would fall for these "pitches" and put significant amounts of money into investments they don't understand. Never too late though to get educated and take control. Good luck.


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## doctrine (Sep 30, 2011)

Welcome to the club, NicW11. I am sure a larger % of people here ended up here because they discovered the same thing you did. The good news is that you will be saving a lot of money in the future.

There are lots of resources out there. Great books, great websites. The one thing you have is time, so you should take lots to do research before you change anything. You've had your investments in RBC since 2003, so no need to sell everything tomorrow.

Why don't you try reading up on the Couch Potato strategy of passive investing and see if you like what you see. There is a FAQ, very nice and up to date lists of index funds and ETFs with extremely low fees, and sample portfolios - all that will put your RBC mutual funds to shame in terms of costs.

http://canadiancouchpotato.com/


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## jamesbe (May 8, 2010)

Yup I'm in the same boat, I posted a thread about a month ago. Really when you think about it all the advisor is giving you besides a few hours a year is someone you can "blame" when things go bad. If you do it yourself you can only blame yourself but really it's not like there is any recourse so it's an empty reason.


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