Mutual Funds FAQs

Are all mutual funds eligible for my RRSP?

All mutual funds are 100% RRSP eligible if they are held in Canadian currency. The rules once stated only 30% of your RRSP could be in foreign securities, however all foreign funds (commonly known as global or international funds) are eligible mutual funds that can be invested in your RRSP.

What is a MER?

A MER is a Management Expense Ratio that tells you roughly how much you are paying in management fees and expenses each year. It includes most of the fees and expenses and is expressed as a percentage of the fund's total value.

How do you calculate the value of each unit?

To calculate the value of a fund unit (or the net asset value per share NAVPS) the fund portfolio's total value for each day is divided by the total units the fund has issued.

Are there costs when buying a mutual fund?

There are two kinds of sales charges. You can pay a percentage of the purchase price when you buy your mutual fund units. This is called an initial sales charge or front end fee. Or you can choose to wait until you sell your units and pay a percentage of their total value at the time you sell. We call this a deferred sales charge. If you hold units of a mutual fund for six or seven years, you won't pay any deferred sales charges at all.

Deferred sales charges may be a good option if you plan to leave your money in the mutual fund for a long time. That's because there is no fee to open the account and place an investment. Provided that you keep the investment for a six to seven year period there are no fees incurred in redeeming the account. If you redeem funds during the six/seven year time frame, the deferred sales charge fee is on a sliding scale, declining each year that you hold the investment (Example, 5.0% 1st year, 4.5% 2nd year, declining to 0% after year six).

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