MER comparison of a simlar BMO and TD funds

8682 Views 3 Replies 3 Participants Last post by imrankhan82, Sep 3, 2009

imrankhan82

Discussion Starter · Sep 3, 2009

Here are MERs that I found for similar funds at BMO and TD:

BMO U.S. Equity Fund 2.39
TD U.S. Index 0.53% (investor series)
TD U.S. Index 0.33% (e-series)

I think that the TD e-series fund has lower MER because you can't call in to make changes because you've got to do it all online. Is this right?

The main question I have is why is there such a big difference in MERs between the BMO fund and the TD funds? As far as I know, the BMO fund is also an index fund as its "objective is to increase the value of your investment over the long term by tracking the performance of the Standard & Poor's 500 Total Return Index (S&P 500)." [Source]

Save

1 - 4 of 4 Posts

ChrisR

· #2 · Sep 3, 2009

I'm pretty sure that the "BMO US equity" fund is an actively managed fund, which is why it has a much higher MER.

To make a fair comparison you should probably be looking at the "BMO US equity index" fund, which has an MER of 0.85% (in comparison to TD's US index MER of 0.53%)

For the low cost option you could also compare the following:
BMO US Equity Index ETF (MER 0.23% + trading costs)
TD US Equity index e-Series (MER 0.33%)

Save

Wealthy1Day

· #3 · Sep 3, 2009

Chris is correct. The BMO fund is an actively managed fund. A comparable TD fund would be the TD US Equity find which has a MER of around 2.00.

You are correct about the difference in MERs for the TD e-Series and i-series. They are the exact same index fund - only one is purchased and transacted strictly online. If you find yourself owning the i-fund and meanwhile you're doing everything online then it's a no-brainer to switch to the e-series. I initially purchased my TD Index fund at a branch and therefore it was the i-series. Since then I've done everything online and so I've switched to the e-series.

Whether BMO or TD, the Equity funds are actively managed funds and while similar to their counterpart Index funds, they try to beat the market through active management. A true Index fund will have Index in it's name... i.e. TD US Index vs. TD US Equity which is actively managed... and doesn't try to beat the market, but simply track it. I know the fund descriptions are very similar and rightly so since they are very similar funds, but the Equity funds are actively managed and therefore fees are higher.

The question is then is if they are both very similar which do you choose? Index funds are most definitely lower cost. An actively managed fund can beat the market. But the odds decrease as the length of investment increases.

See less See more

Save

imrankhan82

Discussion Starter · #4 · Sep 3, 2009

Thanks

Thanks for the responses! It's much clearer to me now.

Save

1 - 4 of 4 Posts

This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.

Top Contributors this Month