Enter your numbers and find out if the switch is worth it — annual savings, break-even months, and 20-year compounding difference.
The typical Canadian bank mutual fund runs 1.8–2.4% MER. A comparable index ETF (XEQT, VEQT, ZSP) runs 0.17–0.25%. On a $100,000 account, that gap costs $1,600–$2,200 per year — every year, compounding.
| Year | Current Fund Value | After-Switch Value | Cumulative Difference |
|---|
Assumptions: Gross annual return is applied before MER each year (not including inflation). Capital gains tax is a one-time hit at switch for non-registered accounts. PAC loss is reflected as a conservative friction estimate but not modelled as compounding contributions. Robo-advisor platforms (Wealthsimple Invest, Questwealth, etc.) charge an additional ~0.20–0.40% management fee on top of fund MERs — include that in your target MER if applicable.
The calculator shows the math. Here's the context.
Bank mutual funds (Series A, the default you get through your branch or advisor): 1.5–2.5% MER. The TD Canadian Equity Fund runs 2.08%. RBC Monthly Income sits at 1.68%. BMO's balanced fund family averages 1.90%.
Index ETFs: Vanguard VEQT at 0.24%, iShares XEQT at 0.20%, BMO's ZSP (S&P 500) at 0.09%. All-in-one balanced ETFs hover around 0.20–0.25%.
Robo-advisors: Wealthsimple Invest charges 0.40–0.50% management fee plus ~0.20% underlying fund costs = ~0.60–0.70% all-in. Still roughly 1.5% per year cheaper than a bank balanced fund.
Inside a TFSA or RRSP, switching costs nothing from a tax perspective. You sell the mutual fund, cash lands in the account, you buy the ETF. No taxable event. The only friction is the transfer-out fee ($50–$150) and whatever time it takes.
Non-registered accounts are trickier. If you've held the fund for years with significant gains, selling triggers capital gains. At a 43% marginal rate with the 50% inclusion rate (which applies to gains under $250k for individuals), you're paying roughly 21.5 cents per dollar of gain. On $75,000 with a 25% accrued gain, that's ~$4,000 in immediate tax. The calculator accounts for this — but you might also consider an in-kind transfer to avoid it.
Pre-authorized contributions are generally available through any major ETF brokerage now — Questrade, Wealthsimple, RBC Direct Investing, TD Direct. If your only hesitation is "I'll stop investing regularly," that argument doesn't hold in 2024. Enter $0 for PAC loss unless you genuinely have no path to auto-investing at the new platform.
If your only switching cost is a $150 transfer fee, break-even on a $75,000 account saving $1,400/year is about 38 days. If you're triggering $4,000 in capital gains tax, break-even is roughly 34 months. That's still worth it over a 20-year horizon — but it's a real cost today.
In-kind transfer option: If your current holding can be transferred in-kind to a self-directed RRSP or TFSA at a discount broker, you avoid the sell/rebuy cycle entirely. No taxable event for registered accounts, and some brokers will take the mutual fund in-kind then let you sell it on their platform. Ask specifically: "Can I transfer my RBC mutual fund in-kind to my Questrade RRSP?" The answer varies by fund type. See the in-kind vs cash transfer checker for detail.
Three legitimate reasons to stay in a mutual fund: you're in a group RRSP with employer matching that offsets the fees (run the match vs MER calculator), you need a specific fund structure that doesn't exist cheaply as an ETF, or switching friction genuinely exceeds your time horizon (rare, but possible in a short-term non-registered account with large gains).
"My advisor will be upset" is not one of those reasons.
See your current MER in real dollars over 10, 20, and 30 years. Good starting point before running the switching math.
Workplace plan with employer matching? Run this first. Matching often beats the fee disadvantage — but only up to a point.
Non-registered account? Before triggering a taxable event, check if an in-kind transfer is possible for your fund type.
Side-by-side comparison of structure, liquidity, tax treatment, and when mutual funds still have a legitimate use case in Canada.
Before switching, confirm which ETF or robo-advisor you're actually moving to. The fee gap varies significantly.
Compare Canadian ETFs Compare Robo-AdvisorsThis calculator is for informational purposes only and does not constitute financial advice. Tax calculations are estimates — actual capital gains treatment depends on your specific situation, adjusted cost base, and applicable provincial tax rates. Consult a tax professional for decisions involving significant non-registered assets.