The Alphabet Soup of Fund Codes - F Series Explained

This weekend I’ve read a few great articles on the “Alphabet Soup” of Fund codes. How could a regular investor understand what all these series mean? Let me break 2 main fee codes down for you. For years, I’ve sold A Series funds to my clients. My focus was always advising my clients to investment in a great performing fund with the lowest Management Expense Ratio (MER). I didn’t know that fee for service was available because my pervious employer couldn’t offer it!


Now at McLeod Mooney Financial Planning the focus is the same, but the ability for my clients to switch to Fee Based Mutual Funds is huge win for you. A few things stand out to me on what the benefits are in Fee Based Mutual Funds:


· Transparency of fees and costs: Costs are visible and reported to investors so they can compare mutual fund performance across funds as only the investment management fee, operating expenses and taxes are embedded. (No Trailing Commission embedded)


· Tax deductibility: For non-registered or open accounts the advisor fee is tax deductible!


· Lower costs to you, the client: Pairing a lower overall fee that is tax deductible should put more money in investors portfolios as well as their pockets!


Here is an example for an account with 250K in it. I use one of my top selling US Equity funds. TDB 410 The US Blue Chip Fund. The Fee based series MER is 1.05%, most advisors would charge the client an advisor fee of 1%. So, the clients all in cost is 2.05% per year. The A series all in cost for the same fund is 2.39%, this includes a trailing commission of 1%. That saves you 0.35% every year for the exact same investment! So right off the bat the fee-based version is cheaper, this is the case with most A series mutual funds across Canada.


The other major benefit of fee based mutual funds is in non-registered investment accounts the advisor fee (your 1% charge) can be written off during tax time.


Over 10 years a client in a fee-based account would have an investment worth almost $8500.00 more from fee savings. With an additional bonus that they would be able to write off the advisory fee of $2500.00


Fund Code

Series

MER

Cost on $250k/yr

+ Advisor Fee 1%

Total Cost

Difference

TDB410

F Series

1.05%

$2625.00

$2500

$5125.00

TDB310

A Series

2.39%

$5975.00

NA

$5975.00

+$850/yr

Overall, this would save an investor $850/year in fees, compounded by the return on the fund.


As I mentioned earlier, I am super happy to be working with McLeod Mooney Financial Planning. They are an experienced and locally owned financial services firm specialized in managing Group RRSPs, Pension Plans as well as full-service Family Financial Planning. Serving British Columbia, Alberta and Ontario, we are honored to provide direction and guidance to plan sponsors removing the CAP Guidelines liability from their organization. As well as third party, nonpartisan, certified financial planning, and advice to all our valued clients.


During my career I have loved working with all my clients, I miss you all and I would love to hear from you! I can be reached in multiple ways.

- The office 604-428-5192

- Directly on my cell 604-340-4352

- At the office which is at #101 – 11950 80th Ave Delta BC V4C 1Y2.

- Or via email tammy@mcleodmooney.com


Disclaimer: The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as investment, financial, legal, accounting or tax advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by Tammy Dorais for the benefit of Tammy Dorais who is a Investment Funds Advisor at McLeod Mooney Financial Planning a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities.

Mutual Funds, approved exempt market products and/or exchange traded funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. Mutual funds are not guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Fund values change frequently and past performance may not be repeated. Investia is not liable and/or responsible for any non mutual fund related business and/or services.

Life Insurance related services and products are provided through McLeod Mooney Financial Planning Inc. via IDC Worldsource (MGA).




103 views0 comments

Recent Posts

See All