The cost to investors of owning actively managed mutual funds has dropped six basis points in Canada since 2014, according to an analysis by financial services research firm Strategic Insight. The study, commissioned by The Investment Funds Institute of Canada, was released Oct. 4.
"Strategic Insight's 2017 analysis confirms that market forces are exerting downward pressure on fund fees to the benefit of investors," stated Paul C. Bourque, president and CEO, IFIC in an announcement. "This trend to lower costs is especially noteworthy in light of interest expressed by Canada's regulators in whether fund investors here are benefiting from competitive pricing."
An update of a 2012 study
The report, Monitoring Trends in Mutual Fund Cost of Ownership and Expense Ratios – A Canada-U.S. Perspective, 2017 Update, is a follow up on a study published in 2012 that examined the relative costs of mutual fund ownership in Canada and the United States. The study was last updated in 2015.
The report says the average total cost of ownership of mutual funds for clients using advice-based distribution channels in Canada at the end of 2016 was 1.96 per cent, taxes excluded. This compares with the average cost of ownership of 1.95 per cent for clients investing in comparable funds in the United States, where taxes are not levied on fees.
Most companies lowering fees
The analysis says that Canadian mutual fund companies have adjusted the pricing of many of their products at an "unprecedented pace" since 2015. Fund companies accounting for nearly 90 per cent of the industry's assets have lowered the cost of their funds to the consumer. U.S. costs also dropped during the same period.
To learn more, read the report on IFIC’s website.