A management fee (which is a percentage of the overall amount of money you have invested) is something you pay directly to the robo-advisor company. Be aware, however, that the management fees charged by robo-advisors are separate from the MERs charged by individual funds. Luckily, robo-advisors usually offer investing portfolios with ETFs that feature MERs well below even 1%. To make matters worse, Canadian investors pay some of the highest MERs in the world, with many funds charging MERs of over 2%! For example, if you invest $10,000 in an ETF with an MER of 2%, you’ll pay $200 in MER fees annually.įurthermore, investors pay this fee no matter how well the fund performs so an MER can take a big bite out of your earnings especially if the fund doesn’t do well. While you don’t need to understand all the fine points of how an MER works, it’s vital to be aware that an MER will cut into your earnings. the fee is deducted before the mutual funds returns are calculated). You don’t pay the fee yourself directly, rather the amount is paid by the fund itself before its overall returns are calculated (i.e. The fee is expressed as a percentage and indicates the amount that is subtracted annually from the fund’s overall holdings. The fee covers a spectrum of expenses, including the salaries of fund managers, operating expenses, market research, broker fees, taxes and more. MER stands for “management expense ratio” and it’s an annual fee that is associated with managing a mutual fund or an exchange-traded fund (ETF). MER is a term you’ll frequently come across when investing so it’s crucial to understand what it means.
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