Jonathan Chevreau, personal finance columnist for The National Post, has highlighted a study that points out that mutual fund fees in Canada are the highest in the world. It is widely known that mutual funds domiciled in the United States are cheaper, but the fund industry has argued that there are economies of scale in operating in the United States. But the new study points out that the fees charged by the median fund in Canada is the highest among 18 countries covered by the study in every fund category.
The fund industry would no doubt spin the report, trotting out lame excuses as to why it is expensive to operate in Canada. But, the bottom line is that it will be tough for Canadian mutual fund investors to accumulate a decent nest egg for retirement while paying 2.36% for the median bond fund and 2.81% for the median stock fund in fees every year.
The Canadian mutual fund industry will not change its merry ways if investors are apathetic about the fees that come out of their pockets. As Mr. Chevreau writes in a blog post: “the only way fees would come down in Canada would be if consumers voted with their wallets for lower-cost funds.”
