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Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of securities. It is actively managed by a professional fund manager, unlike most ETFs which passively track an index.
A typical Canadian equity mutual fund sold at a bank has a management expense ratio (MER) of about 2.0% to 2.5% per year. In comparison, an index ETF like XIC.TO (iShares S&P/TSX Composite) has a MER of only 0.06%.
Over 25 years with a $100,000 investment and a gross return of 8%:
The $245,000 difference goes to the fund manager, not you.
In Canada, mutual funds have historically dominated the savings market, mainly because they are sold by bank advisors. However, the majority of actively managed mutual funds fail to beat their benchmark index over the long term. This is why more and more Canadians are switching to low-cost index ETFs.