Three routes to buying mutual funds. Here's what each one costs, who it suits, and what you should look for before you commit.
A mutual fund pools money from many investors to buy a portfolio of stocks, bonds, or other assets. You buy units rather than individual securities. A fund manager (or an index) decides what the portfolio holds. In exchange, the fund charges an annual management expense ratio — the MER — which is deducted from the fund's assets before returns are reported to you.
The MER is the single most important number on a fund's fact sheet. Everything else — past performance, star ratings, the manager's name — matters far less. A fund's past returns don't predict future returns. The MER is guaranteed to drag on returns every year, forever.
What the MER includes: The management fee paid to the fund company, operating costs, trailing commissions to advisors (in most mutual funds), and applicable taxes. The MER does not include trading commissions inside the fund (the TER or trading expense ratio) or any sales loads. These are added costs.
If a fund has a 2.0% MER and earns 7% in a year, you receive roughly 5%. Over 25 years on a $50,000 investment, that 2% costs you about $90,000 in foregone returns. On a $200,000 portfolio, the math is brutal. This is why MER is the first number you look at — not the last.
For a deep dive on fund fees, see the MER fees explained guide.
Walk into any RBC, TD, Scotiabank, BMO, or CIBC branch and ask to invest in a mutual fund. Within 30 minutes you can have a pre-authorized contribution plan set up and be on your way. This is the path most Canadians take — and it's the most expensive.
A bank financial advisor (technically a mutual fund salesperson licensed under the Mutual Fund Dealers Association) will ask about your goals, risk tolerance, and time horizon. They'll recommend a fund — typically from the bank's proprietary lineup. You fill out paperwork, link a chequing account, and set up automatic contributions.
Bank-branded mutual funds in Canada typically carry MERs between 1.7% and 2.5%. That range includes management fees and built-in trailing commissions — the payment the bank makes to its advisors for keeping you in the fund.
| Bank | Example Fund | Typical MER | Trailing Commission |
|---|---|---|---|
| RBC | RBC Balanced Fund | 2.02% | ~1.00% |
| TD | TD Balanced Growth Portfolio | 2.17% | ~1.00% |
| Scotiabank | Scotia Balanced Opportunities Fund | 2.20% | ~1.00% |
| BMO | BMO Balanced Fund | 2.15% | ~1.00% |
| CIBC | CIBC Balanced Fund | 2.18% | ~1.00% |
Watch out for deferred sales charges (DSCs). While DSC funds were banned for new sales in Canada as of June 2022, many Canadians still hold older DSC funds that lock them in with surrender charges of up to 6% if they sell too early. Check your fund's facts sheet and look for the redemption fee schedule before buying anything that's not a front-end load or no-load fund.
Self-directed investing through a discount broker (also called an online brokerage) lets you buy mutual funds, ETFs, and individual stocks without paying for embedded advice. You make your own decisions. In exchange, the fees are dramatically lower.
| Broker | Account Fee | ETF Commissions | Mutual Funds | Best For |
|---|---|---|---|---|
| Questrade | None (>$1K) | Free to buy | Available | Most investors |
| Wealthsimple Trade | None | Free | Limited selection | ETF-focused investors |
| RBC Direct Investing | $25/qtr (waiveable) | $9.95/trade | Full lineup | RBC clients wanting simplicity |
| TD Direct Investing | $25/qtr (waiveable) | $9.99/trade | Full lineup | TD clients wanting self-direction |
| CIBC Investor's Edge | $100/yr (waiveable) | $6.95/trade | Full lineup | Lower-cost bank brokerage option |
Questrade and Wealthsimple Trade are the two most compelling options for most Canadians because they charge nothing to buy ETFs. If you're building a portfolio of index ETFs — which is the strategy most investors should consider — those two platforms eliminate trading costs entirely.
Go to questrade.com and start an account application. You'll need your SIN, a piece of government-issued ID, and banking information for the initial deposit. The process takes about 15–20 minutes. Account types include RRSP, TFSA, FHSA, RRIF, cash (non-registered), and margin.
Transfer money via bill payment (slowest), electronic funds transfer (2–3 business days), or account transfer from another institution (allow 5–10 business days for an RRSP-to-RRSP transfer). To avoid losing RRSP or TFSA contribution room, always use a direct transfer between institutions rather than withdrawing and re-depositing.
For most investors, a single all-in-one ETF like XBAL or VBAL covers everything — Canadian and global stocks and bonds in one product at 0.20–0.24% MER. Search the ticker in the platform's search bar, review the fund facts, and place a buy order. Use a limit order rather than a market order to control the price you pay.
Set up a recurring PAC from your bank account and make a habit of buying on a set schedule — monthly or with each paycheque. Questrade does not automate ETF purchases (you still click buy), but Wealthsimple's managed account option does this automatically if you want full automation.
Buying mutual funds at a discount broker: Most discount brokers carry no-load mutual funds from third-party fund companies (Mawer, Steadyhand, PH&N, etc.) in addition to their own ETFs. You can buy Mawer Balanced (MAW104) at Questrade with no transaction fee. This is often overlooked — discount brokers aren't just for ETFs.
A financial advisor can add real value — tax planning, estate planning, behavioural coaching during market crashes, and helping you navigate complex situations like an inheritance or divorce. What advisors add in value is not always reflected in the fund fees you pay, though, so it's worth separating the two.
Studies by Vanguard and others suggest that a good advisor can add up to 3% per year in "advisor alpha" through behavioural coaching, tax-efficient withdrawal strategies, and asset location. The catch is that a 2% MER mutual fund lineup consumes most of that potential benefit in fees before you see any of it. The best value comes from fee-based advisors who use low-cost funds or ETFs — you pay explicitly for advice, not through a product's embedded cost.
Already covered above, but worth repeating: this is the single most important number. For Canadian equity funds, an MER below 0.50% is excellent. For balanced funds, below 0.30% is excellent. Anything above 1.5% requires a very compelling reason — like exceptional long-run outperformance that more than offsets the drag.
What does the fund actually own? A "Canadian equity fund" might hold 60% in banks and energy companies. A "global balanced fund" might be 80% North America. Look at the top 10 holdings and the geographic breakdown. If the fund holds mostly the same things as your other accounts, you're not as diversified as you think.
Canadian regulations require every mutual fund to publish a Fund Facts document — a standardized two-page summary. It must disclose the MER, past performance, top holdings, and risk rating. It also shows the "cost of investing" example, which illustrates in dollars what you'd pay on $1,000 over 1, 3, 5, and 10 years. This is the clearest way to compare fees across funds.
Look for "no-load" funds wherever possible. Front-end load funds charge a percentage when you buy (negotiable, often 0–2% now). DSC funds charged a declining redemption fee if you sold too early — these can no longer be sold new to Canadians, but existing DSC funds are still out there. There's no good reason to buy a fund with a sales charge when no-load alternatives exist at the same or lower cost.
If you're investing in a non-registered account, check how much the fund distributes annually and in what form (capital gains, dividends, interest). Heavy distributions of interest income will create a tax bill each year even if you don't sell anything. Funds that distribute heavily can create "phantom income" — a tax hit with no corresponding cash in your pocket.
The Fund Facts rule: Canadian securities law requires that your advisor deliver or provide access to the Fund Facts document before you buy a mutual fund. If no one has shown you the Fund Facts, ask for it. Specifically ask: "What is the MER, and what are the trailing commissions embedded in that MER?"
The account type affects your taxes and contribution rules as much as the fund choice does.
For most Canadians just starting out, max your TFSA first, then your RRSP. The FHSA is worth using if you're a first-time buyer. See the RRSP vs TFSA guide for a full breakdown.
Compare MERs and long-run costs across Canada's most popular mutual funds and ETFs.
Understand MERs See Top Balanced FundsThis page is for educational purposes only and does not constitute financial advice. MERs and account rules are subject to change. Consult a registered financial advisor or refer to CRA.gc.ca for current contribution limits and tax rules. Best practices depend on your personal tax situation, time horizon, and risk tolerance.