At first glance, index mutual funds available from CIBC sport expenses that are a bit on the high side. Unlike TD e-Series funds, which charge MERs ranging from 0.31 to 0.48, CIBC’s index funds charge MERs that are about 1%. But as a reader pointed out the other day, CIBC offers a management fee distribution discount of 0.63% for investors who hold more than $150,000 in their index mutual funds. Investors with more than $500,000 in CIBC index funds can get a discount of 0.68%. According to CIBC the discount “is calculated and accrued daily and distributed to investors as a special distribution that is reinvested in additional units of the relevant Fund on a quarterly basis”.
Apart from the MER rebate, CIBC index funds are interesting because the line up includes funds, which track indices, that are not available through TD e-Series funds or Altamira Precision Series funds:
- CIBC Canadian Short-Term Bond Fund (CIB489, MER 1.25%) tracks the DEX Short-Term Bond Index.
- CIBC Canadian Bond Index Fund (CIB503, MER 1.0%) tracks the DEX Universe Bond Index.
- CIBC Canadian Index Fund (CIB300, MER 1.0%) tracks the S&P/TSX Composite Index
- CIBC US Broad Market Index Fund (CIB484, MER 1.0%) tracks the Dow Jones Wilshire 5000 index and provides a one-stop exposure to the entire US stock market.
- CIBC International Index Fund (CIB510, MER 1.0%) tracks the MSCI EAFE Index, which provides exposure to Europe, Japan and Australia.
- CIBC Emerging Markets Index Fund (CIB519, MER 1.2%) tracks the MSCI Emerging Markets Index.
Note that the MERs were obtained from the latest prospectus and do not include discounts that may be applicable. CIBC also has index funds tracking global bonds, the S&P 500, Europe, Japan, Asia-Pacific markets and a balanced index fund. CIBC’s index funds are also available through PC Financial, which offers a rebate of 10 basis points. A comparison of no-load, low-MER index mutual funds is available on Bylo’s website.
Though CIBC’s mutual funds are interesting, passive investors can do better elsewhere. Investors with smaller portfolios will find TD e-Series funds significantly cheaper and those with larger portfolios will find ETFs far cheaper even after accounting for trading commissions.
