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After not paying attention to my RSP for a long time, I decided back in June to catch up on some reading about index investing. After finishing, I decided on a 3 step plan to take control of my RSPs.

Step 1 - adjust the allocation and fund choice in my workplace RSP match program (choosing the 2 index funds available and a couple of other funds that had a relatively competitive MER).

Step 2 - transfer my wife's altimira/national bank funds to BMO Investorline, sell them and reinvest in a portfolio of low MER index funds.

Step 3 - figure out what to do with some DSC Mutual Funds purchased through an advisor.

Steps 1 and 2 were completed in July/August.

As for Step 3, a portion of my RSP (generally purchased from 2003 through 2007) was done through an advisor before I started to work in an environment where my employer offered an RSP match opportunity. Since 2007, I have still invested through that advisor on a monthly basis to fill up the little bit of room between my max allowable annual contribution and my match program. I put a stop to those monthly withdrawals in July but am not sure what to do with these funds. These Funds are held through MRS trust (which charges an annual fee on the account for doing nothing). I just don't feel I get any value from the advisor (other than the annual February call asking if I have any more RSP contributions for the year) and the funds are generally underperformers.

Firstly how do I find out how much of each of my funds will be subject to a charge on withdrawal (I presume the portion invested from back in 2002 will result in no fees and the stuff purchased a couple of years ago will be subject to the highest fees)? Not sure my advisor is going to really want to help me unload them at this point. Would MRS trust be able to give me that info?

For the funds that I can't get out without a sizable penalty, can I at least transfer them to BMO Investorline so that I can sell them off gradually on my own and also not be subject to an account fee or are they stuck with MRS trust?

At what point are underperforming high MER funds worth selling even if it means paying a couple of percentage points or so in DSC?
 

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Years ago, my advisor put me into high fee, underperforming managed mutual funds with deferred sales charges and, not knowing any better, and naively thinking that the advisor was looking after MY best interests, I went along with it. Now, years later, I know better.

Generally speaking, I would not pay any penalty charges for early refunds but I would take out the allowable free amount annually and reinvest it either in individual dividend paying stocks or in broad-based ETF's with the lowest fees.

To those of you who are back where I was many years ago, do not invest in any advisor's choice of high fee managed funds with deferred sales charges!!:mad:

Period!!!!
 

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Congrats on seeing the light. :)

You should be able to find out the DSC info from either MRS or the fund company itself.

As Belguy, mentioned - most backend funds let you redeem 10% per year (starting on Jan 1) without any fees.

It might be worth the effort to find out exactly where you stand - if the DSC fees on a complete withdrawal are not that much, you might be better off just getting out of them to reduce your hassle, if nothing else.

You should be able to transfer the funds to BMO, but don't forget about transfer fees - try to get BMO to cover this.

DSC funds can be transferred to other funds within the same fund company without any DSC charges. One option is to look for cheaper funds which you can switch to, if you don't want to redeem.

As for the break-even point - you have to look at how much fees you will be paying if you stay in the DSC fund compared to how much fees if you pay the DSC and buy something cheaper over the time that the DSC fees will exist.

If you can save 2% per year on annual MER, that will probably make up any DSC charge pretty quick (even if it does tear up your insides to think about having to pay it) :)
 

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Firstly how do I find out how much of each of my funds will be subject to a charge on withdrawal (I presume the portion invested from back in 2002 will result in no fees and the stuff purchased a couple of years ago will be subject to the highest fees)? Not sure my advisor is going to really want to help me unload them at this point. Would MRS trust be able to give me that info?
No, which gets back to your point about what they're charging that darn fee for. They used to have to track and report foreign content but they haven't had to do that in some five years. But I digress.

You'll need to call each of the companies that you're invested with and ask a few questions, namely:

- What amount can I withdraw today without incurring redemption charges? (The reply willl either be in $ or # of units).

- What is the total charge for liquidating all of my units (in each fund)?

- What is/are the maturity date(s) of my units? (You'll receive a reply for each fund. And for each fund you may have different tranches of units maturiting on different dates.)

For the funds that I can't get out without a sizable penalty, can I at least transfer them to BMO Investorline so that I can sell them off gradually on my own and also not be subject to an account fee or are they stuck with MRS trust?
Yes you can. You can also switch to another fund within the same 'complex' or family while staying on the same 'redemption schedule' and avoiding a fee. This may be desirable depending on what else you can move to within the same family of funds. MRS will charge you an exit fee for closing your account by the way.

At what point are underperforming high MER funds worth selling even if it means paying a couple of percentage points or so in DSC?
If you can't be assured of earning back exit fees in the form of cost savings within a year or two, I'd wait. The benefits of low fees aren't meaningful over shorter periods of time. It's only over longer investment holding periods that low fees really make their impact.

Good luck.
 

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I would also consider how much the fund is up. You will need to know how much you invested in each fund.

If you are up ??? I might bite the bullet and pay the discharge fee and get on with life.
 

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Same Boat

I have been in much of the same spot as you, minus my employer adding to my funds.

I have switched to a direct brokerage and called all of my fund companies directly to sell all mature DSC funds that were under-preforming (there were many). All new money has been added to no-load funds with lower MER or ETF's.

The last step was to look at the funds that don't mature for a long while and their fund families. I have just recently switched out these funds for better preforming or lower MER issues.

Wasn't that hard (thanks to guys and gals here ;) )
 

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Some low MER funds worth considering:

Beutel Goodman American Equity
Beutel Goodman Corp/Pro Active Bond
Beutel Goodman Income

Mawer Canadian Equity

McLean Budden International Equ D
 

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Discussion Starter #8
All - Thanks for the advice. Looks like I will need to set aside some time to call the mutual fund companies.
 

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Discussion Starter #9
I spoke with the funds. I am looking at anywhere from 2.5% to just over 3% (varies by fund) to get out of everything. Why am I not surprised that the 2 poorest performers have the worst DSCs.

Thoughts on whether I should just take the hit to get my investments where I want? Also, MRS trust will probably hit me with about $300 or so of closing and annual fees (of which BMO investorline will cover about $75).

If I stick with the funds, in addition to the 10% numbers that can be redemed without penalty, I do have an additional 10%-12% of each fund that I can redeem now as they have past the maturity date. Because of $$ cost averaging, I should have a few units come due monthly.

Problem with all this is that I really want to be a couch potato investor and holding on to part of these while I set up a 5 or so other funds will cause me to take a more active involvement than I would like.
 

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I have experienced what you are going through and it is one reason why I dumped my financial services salesperson.

I just took out as much money from each fund annually that was free of deferred sales charges until I was out completely and gradually built a portfolio of broad-based ETF's.

To all those who may be tempted in the future, NEVER buy managed mutual funds with deferred sales charges and find yourself trapped for several years.

It's not so bad if your funds have made nice gains and you can therefore cash out early, pay the penalty charges, and still come out ahead but how many managed funds have made much net profit over the past three years?
 

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Belguy.

I asked you in another post here as well,

Would you care to let us know what ETF's you are in. and perhaps why?

I would NEVER again use a "financial advisor". I fired the last guy I was dealing with yaers ago.
Most of them are useless, although quite clever at making sure they make nice returns from your account , whether you gain or lose money.

Anthony
 
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