Not everyone wants to buy ETFs. Maybe you prefer automatic contributions. Maybe your workplace plan only offers mutual funds. Whatever the reason — you don't have to pay 2% MER. These funds prove it.
The internet screams "just buy XEQT" at anyone who mentions mutual funds. That advice works for a 28-year-old who's comfortable with a brokerage account. It doesn't work for everyone.
Mutual funds let you set up automatic bi-weekly contributions without paying trading commissions. They work inside group RRSPs where ETFs aren't an option. They don't require you to calculate how many units to buy. For plenty of Canadians, mutual funds are the right vehicle — they just need to stop paying 2.3% MER for the privilege.
The difference between a 2.2% MER bank fund and a 0.33% MER index fund is roughly $72,000 on a $50,000 portfolio over 20 years. Run the exact math with our MER fee calculator.
Ranked by MER. All of these are index funds — because that's where the low fees live in the mutual fund world.
The gold standard for low-fee mutual funds in Canada. Tracks the S&P/TSX Composite Index. You can only buy this through TD Direct Investing — not at a TD branch with an advisor. That's the catch. You need a self-directed account.
The e-Series lineup also includes US equity (TDB902, 0.35% MER), international equity (TDB911, 0.50% MER), and Canadian bonds (TDB909, 0.50% MER). Together they make a complete portfolio for under 0.40% blended MER.
Tracks the S&P 500 in Canadian dollars. No currency hedging, which is what you want for long-term holdings — hedging costs money and adds tracking error.
Pair this with TDB900 and TDB911 for a classic three-fund Couch Potato portfolio.
Double the cost of TD e-Series, but still dramatically cheaper than the typical RBC mutual fund at 2.0%+. Available through RBC Direct Investing. If you're already at RBC and don't want to transfer to TD, this beats any of their actively managed funds.
RBC also has a US Index Fund (RBF557, 0.72% MER) and a Canadian Bond Index (RBF560, 0.67% MER).
Not great compared to TD or even RBC, but if you're locked into CIBC (maybe a group RRSP), this is the least-bad option in their lineup. Still saves you nearly 1% versus their actively managed funds.
Same story as CIBC — not cheap by index fund standards, but roughly half the cost of Scotia's actively managed equity funds. Useful if your employer's group RRSP is through Scotia.
Side-by-side: every major bank's index mutual fund versus their typical active fund and an ETF equivalent.
| Fund | Code | MER | Bank's Active Equiv. | Active MER | ETF Equiv. MER |
|---|---|---|---|---|---|
| TD Cdn Index – e | TDB900 | 0.33% | TD Canadian Equity (TDB161) | 2.13% | XIC 0.06% |
| TD US Index – e | TDB902 | 0.35% | TD US Blue Chip Equity (TDB687) | 2.31% | VFV 0.09% |
| TD Intl Index – e | TDB911 | 0.50% | TD International Growth (TDB682) | 2.46% | XEF 0.22% |
| TD Cdn Bond Index – e | TDB909 | 0.50% | TD Canadian Bond (TDB162) | 1.54% | ZAG 0.09% |
| RBC Cdn Index | RBF556 | 0.66% | RBC Canadian Equity (RBF265) | 1.97% | XIC 0.06% |
| BMO S&P/TSX Capped | — | 0.95% | BMO Canadian Equity (GGF65102) | 2.04% | ZCN 0.06% |
| CIBC Cdn Index | CIB225 | 1.05% | CIBC Canadian Equity (CIB230) | 2.26% | XIC 0.06% |
| Scotia Cdn Index | BNS625 | 1.05% | Scotia Canadian Equity (BNS630) | 2.14% | XIC 0.06% |
The pattern is clear: TD e-Series wins by a mile among mutual funds. RBC is distant second. CIBC, BMO, and Scotia "index" funds still charge 1%+ — at that price, you're better off opening a Questrade account and buying actual ETFs.
Mutual funds let you set up automatic bi-weekly or monthly purchases for free. No logging in, no placing trades, no calculating units. You set $500/month into TDB900 and forget it. With ETFs, you need to manually buy each time (or use Wealthsimple's auto-buy feature, which is newer and more limited).
If your employer offers a group RRSP with matching, you're almost certainly limited to mutual funds. Take the employer match — it's free money. But within the plan, pick the lowest-MER index fund available. Read our group RRSP guide for specifics.
Most discount brokerages don't offer RDSPs. TD Direct Investing does, making TD e-Series one of the only low-cost options for RDSP holders.
Investing $50 or $100 per paycheque? Mutual funds handle fractional amounts without trading fees. ETFs technically work at some brokerages now, but mutual funds have done this cleanly for decades.
The honest take: If you're comfortable with a self-directed brokerage account and have $500+ to invest at a time, ETFs are cheaper. XEQT at 0.20% beats every mutual fund on this list. But for automated small contributions, group plans, and RDSPs — these low-fee mutual funds are solid. Read our full ETF vs mutual funds comparison.
Adjust the bond allocation based on your age and risk tolerance. A 30-year-old might go 10% bonds. A 55-year-old might want 40%. The classic Couch Potato model uses equal weights as a starting point.
Some banks offer "one-fund" balanced index solutions. These are rarer in the mutual fund world than ETFs (where XBAL and VGRO dominate). The closest mutual fund equivalent is the TD Comfort Balanced Growth Portfolio — but at 1.91% MER, it defeats the purpose.
If you want a one-fund solution under 0.25% MER, you need an ETF: XEQT, VGRO, or XGRO.
Already stuck in a 2%+ MER bank fund? You have three paths:
Check for DSC penalties first. If you bought your fund before June 2022, you might be in a DSC (Deferred Sales Charge) fund with early redemption penalties of up to 6%. Check your Fund Facts or call your advisor. Read our DSC exit plan guide before selling anything.
Plug your current fund's MER into our calculator. Compare against a low-fee alternative. The dollar amounts might surprise you.
MER Fee Calculator How to SwitchNothing on this site is financial advice. Fund codes, MERs, and minimum investments are approximate and change — verify current rates in the fund's official Fund Facts document. Past returns don't guarantee future results. Some links on this site are affiliate links.