By Daniel Evans, CFP® & Investment Coach
Most Canadians are very familiar with mutual funds. In simple terms, a mutual fund is made up of a collection of individual stocks, bonds or other securities chosen by a fund manager with the goal of generating returns for the investors while balancing risk. Investors pay a percentage fee, referred to as the Management Expense Ratio (MER), to cover the cost of the management, marketing and administration of these funds. In Canada the average MER is around 2%.
With greater focus on the cost of investing and fee transparency in Canada, it’s not surprising that there is growing interest in Exchange Traded Funds (ETFs), which in most cases have lower fees than mutual funds. But what else should you know about this up-trending investment option before deciding if ETFs are right for you? Continue reading