Worksheet: Help clients understand active share

Download this worksheet to help clients understand active share.

To help understand what you’re paying for, here’s a breakdown of where a typical 2.08% MER goes.

*One basis point represents 1/100th of 1%, or 0.01%. So, 78 bps is equal to 0.78%.

And here are some details about each component

Management Expenses – costs incurred by the fund company, include the following:

• Investment research: Fund managers are constantly reassessing holdings and evaluating potential holdings. They usually have a team of up to 10 analysts.

• Portfolio management: The process of building or modifying a portfolio based on the results of analyst research.

Marketing

Dealer/Advisor Compensation – funds sold through the advisor channel have annual dealer/advisor compensation fees (also known as trailer fees). These fees are paid to

advisors for the investment advice they provide clients.

Operating/administrative costs – these include regulatory expenses, client service costs, transaction processing fees, custody (the physical holding of securities and other assets), audit and legal fees, financial statements and document management.

SOURCE: Investment Funds Institute of Canada. The association represents no single investment firm and is neutral.