Money Market funds or in an ISA? | Page 3 | General financial discussion | Discussion forum

With registered funds, it's "gotcha" unless and until you're willing to move them out of there to another FI and take the hit on the transfer fee if you can't get it reimbursed.

Another thought on the .25%. It's my understanding that under the new rules, they have to disclose all fees. Maybe i'm wrong about this, but that's what I thought happened with changes last year.
That confusing array of numbers and series is functional for them.
By having two different rates for two supposedly different accounts, they avoid disclosing the fee. or at least until someone catches up with them.

Under CRM2 requirements, http://business.financialpost......ting-rules there was a requirement starting with 2016 year end to show account performance and to disclose fees paid on behalf of the client to the FI, e.g. brokerage. Such fees include fund trailer fees, buy/sell commissions, and account fees.

There is no slight of hand. Wise investors already know that mutual funds, other than F series, already pay trailer fees to the financial advisor/broker. The one thing that is still broken is that there is no need to disclose Management Fees of the Manager of the mutual fund itself. That is where most of the cost is and what most investors do not yet understand. In a typical equity mutual fund, the management fee might be 2% or more....and the trailer fee might be 0.5-1.0%.

Some investors and financial planners made representations to the OSC/CSC a few years back arguing that management fees should be disclosed, and further that F series mutual funds should be obtainable via discount brokers. The argument being that the trailer fee is meant to compensate financial advisors for their guidance and advice to clients, but of course, discount brokerages do not provide any advice. They are simply order takers. Alas, nothing has come to pass. Canadians, relative to Brits and Americans for example, still get hosed. Hence wise investors have moved from high MER actively managed mutual funds to low MER passive index mutual funds, or extremely low MER Exchange Traded Funds traded on the equity markets.

Ultimately , the battle over access to F series ISA funds to get the extra 0.25% into investor hands will continue, perhaps well past my best before date. That said, like a few others have mentioned, I use the brokerage ISA funds as a placeholder for cash while I make buy/sell decisions on various stock and bond investments.

Bill said
However before a wise investor purchases a mutual fund it's pretty easy to find what its MER is. Also, I believe most (all?) funds' annual returns are expressed after the MER is deducted, i.e. if a fund shows it earned 5% last year, that's after the MER has been charged.  

Well, yes, MERs are published and returns are net of MER, but most investors don't realize how MERs work and how that is a headwind to performance returns. At one time before the advent of ETFs and discount brokerages, investors were mostly hostage to mutual fund sales folk and full service brokerages. Thank goodness that model is breaking down allowing those of us who want to DIY, to do so cost effectively and efficiently.

That is indeed bizarre. One would think it would be part way between Series A (full trailer fee of about 25bp) and Series F (zero trailer fee).

I agree something is different here. I know the brokerage based ISAs (Investment Savings Accounts sold as mutual funds) typically have a distinct 25bp difference in MER between Series A and F. Clearly MMF trailer fees must vary between providers.

0.75% is probably the regular management fee. But, RBC Global Asset Management probably waived part of that to keep the return to the fund unitholders from going negative.

Can't be charging ¾% management fee when money market instruments, like Government of Canada treasury bills, were only paying around ½% during 2016 and part of 2017.

As a result, fund managers had been waiving portions of their management fees and suspending trailers on their money market funds. See Globe & Mail: Money market funds to trim fees.

I think the A, D, and F series don't have significantly different MER's because none of them had been paying trailers.

Yes, they are similar to those High Interest Savings ETF's offered by Purpose Investments.

They are so similar that bank-owned discount brokerages RBC Direct Investing and TD Direct Investing refuse orders for the High Interest Savings ETF (TSX stock symbol PSA)!

Rob Carrick wrote about the situation in the July 27 Globe & Mail article "Not all online brokers are friendly to investors holding cash".

AndreyG said
It is 2023, May 4. how Money Market Funds are doing now?
I checked at TD - TDB2913 yield 4.73% today.
How they compare with ISA?  

See for yourself here:

https://www.rbcroyalbank.com/products/isa/index.html

The thread is Brokerage investment savings accounts.

The TDB2913 TD Canadian Money Market Fund is riskier.

According to its December 2022 annual report, over 85% of its assets had no government backing:

43.4% Commercial paper
38.4% Bankers' acceptances
3.6% Corporate bonds

The yield is being juiced by commercial paper.