Over the years while helping readers, friends, and co-workers with investing, I’ve come to the conclusion that convenience is of the highest priority, even if it means paying higher fees.  Most people simply want to stick with their current banking institution and have no interest in opening a discount brokerage of their own.

Having said that, if they “must” stay loyal to their bank and their mutual funds, I usually recommend that they pick their bank’s index funds as they will likely have the lowest fees of the mutual funds offered.

A new graduate at work recently asked me about investing and told me about the mutual funds that he is invested in.  While it’s great that he is investing at a young age, he is currently invested in mutual funds that average 2.5% MER.  My calculations show that a 1.7% reduction in MER results in a 60% portfolio size after 30 years….  60%!  I believe in corporate profits as much as the next capitalist, but excessive MERs simply do not add value to investors.

So what do we do about  my young friend with expensive mutual funds?  The path of least resistance is to switch to the bank’s index funds which would drop the portfolio MER from 2.5% to approximately 1%.

To help clarify which funds they should pick, here are the index funds offered by each of the big banks and their associated fees.  What I am aiming for is a portfolio that includes:

  • Canadian equity index;
  • US equity index (non-hedged);
  • International equity index; and,
  • Canadian bond index.


  • CIBC Canadian Index Fund (MER 1.14%);
  • CIBC US Index Fund (MER 1.18%);
  • CIBC International Index Fund (MER 1.24%); and,
  • CIBC Canadian Bond Index Fund (MER 1.17%).

Royal Bank of Canada

  • RBC Canadian Index Fund (MER 0.72%);
  • RBC US Index Fund (MER 0.72%);
  • RBC International Index Fund (MER 0.71%); and,
  • RBC Canadian Government Bond Index Fund (MER 0.67%).

Toronto Dominion Bank

  • TD Canadian Index Fund-I (MER 0.88%);
  • TD US Index Fund-I (MER 0.55%);
  • TD International Index Fund-I (MER 1.00%); and,
  • TD Canadian Bond Index Fund-I (MER 0.83%).

TD also offers an e-series of mutual funds with extremely low MERs.  Among my favorite mutual funds out there and I use them for our family RESP.

  • TD Canadian Index Fund-e (MER 0.33%);
  • TD US Index Fund-e (MER 0.35%);
  • TD International Index Fund-e (MER 0.51%); and,
  • TD Canadian Bond Index Fund-e (MER 0.50%).

Scotia Bank

  • Scotia Canadian Index Fund (MER 0.98%);
  • Scotia US Index Fund (MER 1.02%);
  • Scotia International Index Fund (MER 1.14%); and,
  • Scotia Canadian Bond Index Fund (MER 0.86%).

Bank of Montreal

  • BMO Canadian Index Fund (MER 1.05%);
  • BMO US Index Fund (MER 1.17%);
  • BMO International Index Fund (MER 1.15%); and,
  • BMO Core Bond Fund (MER 0.95%).

While the majority offer index funds in the 1% range, the RBC and TD e-series funds stand out from the pack.  However, as previously mentioned, switching from your bank’s expensive under-performing active mutual funds to your bank’s index mutual funds will likely result in a much bigger retirement nest egg for you.

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Good post, FT. I agree, and many of my clients just want the simplicity of staying with their current bank rather than the hassle of opening a discount brokerage account and finding the lowest cost ETF (which seem to change every year).

I show the cost savings of switching from their bank’s high-MER funds down to its lower cost index funds – which often results in hundreds or even thousands of dollars saved per year – and I know that eventually they’ll do the math and convert to an even lower cost product and see similar results down the road.

re: “convenience is of the highest priority, even if it means paying higher fees.”

A lot to be said about that, and none of it good.

This is perhaps the biggest, and most bizarre, behavioural finance disconnect. The majority of people work hard, and hard at jobs they don’t necessarily enjoy, to gain their money…but then they stop.

For whatever reason, exhaustion maybe, they don’t think they need to work their money as hard as they worked for their money. So they simply give their money away to someone in hopes that person will multiply it for them, for a fee, of course.

As FT demonstrated above, is that outsourced management worth a 60% degredation to a life long portfolio? I doubt it, since only a very, very low percentage of money managers actually provide market-beating returns.

The Big Banks do a marvelous job at marketing, but a very deliberately lousy job at educating. Preying on this behavioural weak link is one reason the Canadian mutual fund sector has grown to over $1 trillion.

Articles such as this are great for enlightening people to the fact that putting their money to work is a lot less work and a lot more simple than the “professionals” have trained us to beleive (even if you still believe you need mutual funds…baby steps!).

In my RESP’s I own the RBC Index funds listed above with the exception of the RBC Canadian Government Bond Index Fund. I used to own the RBC Canadian Government Bond Index Fund, but switched to the RBC Bond Sr D (MER 0.77), slightly higher MER, but preferred the holdings/exposure…

I’m also an RBC client and opted for the RBC Canadian Gov Bond Index fund as the bond component of my RBC index portfolio because all of the other bond choices are actively managed and have an MER of 1%+. I looked up “series D” funds (not familiar with them) and looks like you have to have a brokerage account to access these funds, correct? I make biweekly contributions – is “series D” funds a good fit for me? I’m trying to keep it simple and contribute directly to (index) mutual funds on a biweekly basis. Thanks.

I hold the TD e-series funds in my RRSP. I love how the low MER does not influence the performance of the index. The e-series is matching the growth of other similar funds and is even doing slightly better with a plus of lower management fees.

I use the four TD E-series that you outlined for a couple of savings vehicles, my only quandary is do I want to add a REIT-like savings vehicle, and if so which one?

I think other than TD e-series, none of them are really worth any of your money being invested to. Hoping that more and more people are buying ETFs and good quality dividend stocks instead.

@BeSmartRich Why do you say that? I don’t like ETFS because you can’t do dollar cost averaging and they’re complicated to buy. I find it much easier to set up a weekly withdrawal from my bank account with my TD e-Series funds. The only thing I don’t like about index funds is that you have to do the asset allocation yourself.

I agree with FT (above) – I buy ETFs regularly with Questrade and its actually quite simple. They are tracked the same way as a regular stock and the nice thing is that Questrade doesn’t charge commissions when buying so you can really dollar cost average down when the markets take a dip

With CIBC, once your portfolio is large enough, you would want to switch to the Premium class editions of their index funds (minimum $50K per) for MERs of about 0.4%.

At the beginning of January I sold all my bank mutual funds even though they were doing well, but decided that the MER’s were too high. Now my funds are in a savings account making next to nothing. I am looking at buying the bank mutual funds mentioned above. I own one stock, but not knowing anything about the stock market, I do not want to enter it.


It sounds like you need some advice. Studies show that the presence of an advisor has a much bigger effect on net worth than fees – and it sounds like this would be true for you.

If you are uncertain about the stock market, you will likely bail out the first time it crashes. To invest in the stock market, you need a method that will keep you invested and confident in your investments during high volatility.


While it is true that fees can greatly reduce the performance of a portfolio, this is mostly true for passively managed funds disguised as “actively managed” funds. Many actively managed funds have holdings in proportions that highly mimic their benchmark, with high MER’s. After fees, these passive funds disguised as active funds under perform, since they are more or less passively managed funds with high fees.

It’s important to note (despite popularized belief amongst the online investing community) that high fees are not the enemy in and of itself. You should be assessing funds based on their risk adjusted returns after fees, and comparing funds to their closest benchmark. For example, Canadian equity funds would use the TSX as a bench mark, and returns, standard deviation, and largest down draw should be compared to the benchmark. Also, pay particular attention to funds that simply happened to be overweight a sector that has done particularly well in recent years. The longer the time frame, the more predictive past results will be of the future.

re: “Studies show that the presence of an advisor has a much bigger effect on net worth than fees…”

Studies also show that the value lies in having an investment plan and sticking to that plan. You don’t need an advisor to create an investment plan, FT’s MDJ is proof of that. Skip the fees and educate yourself; be your own advisor.

I’ve also heard of people mirroring their advisors’ moves, as in letting their advisor control a small portion of their capital, requesting the advisor inform them exactly of each and every trade detail, then making the same trades on their own with the remaining capital to avoid advisor fees. All’s fair…

“I’ve also heard of people mirroring their advisors’ moves, as in letting their advisor control a small portion of their capital, requesting the advisor inform them exactly of each and every trade detail, then making the same trades on their own with the remaining capital to avoid advisor fees. All’s fair…”

That comes with risk. An advisor may inadvertently do something that is not best for client if he/she is unaware of a clients full financial situation. It may not be an issue, but it could be a significant issue.

Hi Michael,

“While it is true that fees can greatly reduce the performance of a portfolio, this is mostly true for passively managed funds disguised as “actively managed” funds.”

I agree completely. They are called “closet indexers”. Everyone should avoid mutual funds that claim to be active, but have holdings similar to the index. Fund managers do it to protect their jobs. Having a portfolio very different from the index takes courage. Closet indexers will just stay close to the index so that they never lose money except when everyone else does.

Closet indexers are easy to market, because they tend to own the big, safe companies people are comfortable with. They are not good fund managers, though – just good marketers.

For example, when I look at a Canadian equity fund and see 3 banks in the top 10, the fund is off my list. It is a closet indexer.

Closet indexers are the real reason that the average mutual fund lags the invoice. If you exclude the closet indexers (and near closet indexers), you are left with the true stock pickers. Then most mutual funds beat the indexes over time.


Ed, Thank you for your suggestion. I did go to see the financial planner at our bank and he suggested I put all our savings, TFSA, and RRSP into GIC’s linked to the market. He said it would be locked in a ladder GIC that would grow over time. He suggested annuities, but we are not sure of what they are. We are retired and not sure if this is a good fit for us. This article does suggest index funds, so maybe that is the way to go. I always have to pay taxes on the interest we make which puts me into a higher tax bracket. I want to save taxes.

I’m a mom who is new to finance, so please excuse the basic questions. I have the following CIBC accounts: TFSA (no investments) and RESP (in Money Market product which I see doesn’t do much in the way of returns). I’d like to change both accounts and from what I read, the CIBC Balanced Index fund and Canadian Short Term Bond Index fund look like good options (it’s important for me to keep the contributions in the accounts, more so for RESP). Am I on the right track, what percentages should I have of each or should I look at other options? Any feedback would be helpful. Thanks.

Thank you all, does National Bank has any similar products?

Yes, National Bank has Canadian, U.S. and International equity index funds (plus some currency neutral variants of the non-Canadian funds). Their MERs are very competitive, in the 0.66 – 0.68% range.

Great blog post. I’m an RBC client and like others, I also found it very convenient to keep all my banking/investments (chequing account, savings accounts, credit cards, RRSPs, TFSA) with one financial institution. I opted for the 4 RBC index funds (Canadian gov bond, Canadian index, US index, Int’l index) and so far so good. Easy to re-balance and reasonable MERs. Once my portfolio gets to a decent size, I’ll consider switching to another institution with more choices and to take advantage of lower MERs, but at this point, I’m focused on saving and RBC’s index funds work just fine. Surprising to see that many RBC clients still opt for the non-index equivalents (i.e., RBC Canadian Equity Fund instead of the RBC Canadian Index Fund).

How do you opt in having those indexes/bond in your mutual funds? I currently have select balance on my TFSA, but I want to switch to index funds. Is there a way to have (Canadian gov bond, Canadian Index, US, Index, International Index) just for my TFSA account?

@Ben: Yes, you can purchase RBC index mutual funds for your TFSA. I have these 4 funds in both my TFSA and RRSP. Simply purchase them via your online RBC banking account or by phone. Really easy.

Can you purchase TD Waterhouse e-Series funds through Questrade?


I tried recently to help a relative switch from having all her registered account holdings invested in a single high-MER balanced fund to being invested in the appropriate asset allocation but using the bank’s index funds. The push-back was beyond belief and only be escalating the issue to the bank manager were we able to make the change desired. This took place at Scotiabank.

Forgive my ignorance but when it comes to the MER, if i currently have my RRSP investments tied up in a mutual fund that carries an MER of 2.5% and i wanted to switch to index mutual funds, wouldnt the MER be about the same?

Ex, for the BMO index funds listed above:
BMO Canadian Index Fund (MER 1.05%);
BMO US Index Fund (MER 1.17%);
BMO International Index Fund (MER 1.15%); and,
BMO Core Bond Fund (MER 0.95%).

If you add up the MER you get 4.32%. I assume you have to average them out to get the realistic MER you are being charged? So if I had 100% of my RRSP spread out in 20% Canadian Index, 20% US Index, 20% International and 40% Bonds, my actual MER would be somewhere around 1.1% instead of 2.5%?

Thanks in advance

I have mutual funds and etf’s with a full service broker. I just opened a Questrade account. If I transfer those funds to QT (where the identical fund fees are significantly lower) will the fees instantly be reduced?

Hi this is my very first question. I have to convert to an annuity by end of the year. I have mutual funds with RBC, mostly Canadian equity, and precious metals. Should I convert all to index funds?Can I do this after end of 2017?


Just found your website and was reading through this article. I am currently 53 years old and not planning to retire till my late 60’s. I have aGroup Retirement Savings Plan through my work and RBC. I have approximately $100,000 in it solely invested in mutual funds. I am thinking of transferring these to the RBC index funds after reading a few of your articles. I dont like to be too conservative. Which of the index funds would you recommend and which asset allocation would you recommend or suggest based on my age. Thank you

I’m a graduate student who just got into financial planning. I didn’t know any better and have just been putting money into a CIBC mutual fund. I guess my question is that should I just ask to switch my CIBC mutual fund to the CIBC Canadian Index Fund?

can you explain why scotia international index is not 100% equities at this time? it looks like 50% Canadian fixed income. does this have something to do with being related to futures contracts?

I’m a not so recent graduate in her late 20’s and I just got into financial planning and savings. I currently have a take home of $3,200 per month with the hopes of getting a better job after sitting for a certification exam. I have approximately $30k in savings (all in my TFSA account and not invested). I bank with TD and would like to stay with them

Where would be a great way to stay building financial wealth – something with low risk?

I was informed that to invest in index mutual funds with Td, I would need to open a direct investing account. How easy is this for someone with no investment knowledge?

Is there a minimum I can invest with to get a better understanding of how this works?


Does Desjardins offer these as well?



I was wondering what your thoughts were regarding VASGX as a USD Mutual Fund to be held in a RRSP?