In today's Globe and Mail, columnist Rob
Carrick points out that mutual funds with a high barrier to entry have better returns. By a high barrier to entry, we typically mean a large initial investment. Are these fund managers any better than the norm? Perhaps yes, but Rob does point out that these particular funds do have smaller
MERs. He speculates that such funds have fewer investors, and so mundane costs such as statements and mailings are less and thus is reflected in the lower
MERs. In my opinion, this finding just provides more support for funds such as TD
efunds which cut the paper mailings to zero and passes the savings on to investors in the form of low
MERs. I have heard that a typical mutual fund account incurs printing/mailing costs on the order of about $50 per account per year. Seems high, but does anybody out there have a better number? On an average investment of $5000, that's a full percent.
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