Canadians pay some of the highest investment fees on the planet. Most of the Canadian mutual funds charge very high fees. Those fees directly reduce your returns. Too much of the investment returns end up in the wrong pockets. The very good news is that in 2025 you can move to very good, very simple and very inexpensive investment options. Cutting your fees from the 2.0% area to 0.20% or lower is life-changing. It could even double your retirement nest egg. Who doesn’t want to retire with twice the financial security, twice the lifestyle? Canadians should avoid most mutual funds. It’s so easy to leave your mutual funds and your advisor behind; you can move to a better place.
Most Canadian mutual funds are offered by salespersons, not qualified advisors. These advisors at Canadian banks and other strip mall sales shops for the high fee funds usually have very low investment knowledge. Their only concern is selling you a product and lining their own pockets.
Beat the bank at their own game
That’s the premise and the truth told by former banker Larry Bates. Larry outlines just how poor are Canadian mutual funds, and the mutual fund industry. Have a read of …
Don’t give away half of your investments – Beat the Bank.
On wealth destruction Larry offers a humorous ‘quote’.
My investments put three kids through University. Unfortunately, they were my advisor’s kids – Anonymous
And there’s the crux, the punchline. When Canadians pay those high fees that average 2.2% annual or more, over an investment lifetime they will give away half of their investment wealth. Don’t be that investor. Don’t let your portfolio get crushed by fees.
Canada’s largest mutual funds, not so bad?
Canada’s largest mutual funds are offered by Canada’s largest bank – Royal Bank of Canada. When I first looked at the RBC Select Funds, including the RBC Select Balanced Portfolio I suggested they were ‘not so bad’. But over time the fees and poor portfolio management continue to take their toll.
In that post I compare the RBC funds to a simple and superior low-fee portfolio approach, using an asset allocation ETF. An ETF is an exchange traded fund.
- Over the last year the iShares Balanced ETF Portfolio (XBAL.TO) is up 11.1% average annual, compared to 8.9% for the RBC Balanced Fund.
- Over the last three years the iShares Balanced ETF Portfolio (XBAL.TO) is up 11.1% average annual, compared to 9.3% for the RBC Balanced Fund.
- Over the last 5 years the iShares Balanced ETF Portfolio (XBAL.TO) is up 7.9% average annual, compared to 6.4% for the RBC Balanced Fund.
Measuring the underperformance
- Over the last year the RBC fund underperformed by 2.2%
- Over the last 3 years the RBC fund underperformed by an average of 1.8% annually.
- Over the last 5 years the RBC fund underperformed by an average of 1.5% annually.
You’ll find other comparisons to (underperforming) RBC Select and dividend funds in that post link.
How bad are TD mutual funds?
Canada’s second largest bank says ‘hold my beer’. I can take your poor performance and go one better. TD’s very popular portfolio solutions known as the TD “Comfort” Portfolios. Once again, this is an attempt to create a diversified global balanced portfolio in one offering. A one-fund solution.
Check out the GIC rates at EQ Bank
I compared the Comfort Portfolios to a simple Canadian ETF Portfolio. The following table lists the average annual returns.
TD Comfort Portfolios to July 2025
The underperformance is tragic. We see the TD portfolios underperforming simple ETF models by 1%, 2%, 2.5%, 3.o% – even up to 6% annual.
Earn 50% more? Double your money over mutual funds?
With an additional 2.5% annual over a 20-year period, you could retire with 59% more. Over a 25-year period you’re talking 80% more. Over 30 years we move to ‘twice as much’.
For that calculation I used a simple investment calcuator and compared 6% and 8.5% annual returns. In the investment world your return advantage could be greater or less given the sequence of returns. But it gives us a very good idea of the potential for greater returns, and a much richer lifestyle in retirement.
How to invest in ETFs
lf you’re new to the Exchange Traded Fund (ETF) concept please have a read of …
An Exchange Traded Fund will allow you to own the companies within a market index, for example the TSX Composite (the Canadian stock market) in one fund, ticker symbol XIC. The fee for buying the Canadian stock market is 0.06%. Yes you read that right, that’s 6/100th of one percent.
You can buy and own the U.S. stock market, the S&P 500 buy the way of the ticker IVV. That index ETF allows you to own 500 of the largest and most profitable companies in the U.S. The cost of owning those 500 companies is 0.03%.
We can also own the international stock markets, bond markets and cash accounts by way of ETFs.
Once again, you can build your own ETF portfolio or you can use an all-in-one global portfolio solution.
They’re called asset allocation ETFs.
If you want advice, planning and low fee ETF portfolios take a look at Justwealth, Canada’s top ‘Robo’ Advisor.
If you want to learn more about ETFs, reach out by way of that Contact Dale button. I’m happy to conduct a tour (via a Zoom call) of this blog for interested readers. We can also go over how to leave your high fee mutual funds behind.
And please share this post with friends and family.
Friends don’t let friends pay high fees.
Poor performance in retirement
You can compound your high-fee ‘mistakes’ in retirement. Your investment and advisory fees directly reduce your spend rate in retirement. Meaning, they could reduce a potential $70,000 of annual income to $35,000 of annual income by cutting your spend rate in half. That’s tragic!
Make sure you do retirement right.
Check out Retirement Club for Canadians.
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Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free. It’s a great place to build your stock portfolio.
Here’s Canada’s top-performing Robo Advisor, Justwealth. You can get advice, planning and low-fee ETF portfolios all at one shop.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.0%. You’ll find some higher rates on GICs up to 4.00%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …
The Tangerine Cash Back Credit Card
For July of 2025 we received $43.56 in cash. You can select 3 categories for 2% cash back. The rest pays at 0.50%.
That cash went into my TFSA account to buy some bitcoin and chips / CHPS.TO, ha.
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Hello. Thank you for always helpful and insightful posts. Would you consider TD e-series funds a suitable alternative to ETFs? They are also free to purchase and MER fees are much lower than that of traditional mutual funds sold through TD. Thank you!
Hi Archie, the TD e-series are very good. But I understand it is difficult to obtain them and manage them as TD likes to hide them. All said, you’re better off with building your own ETF portfolio or the asset allocation ETFs.
But it you can get the TD e-series, yes.
Dale
hi
my wifes & my investments are with td waterhouse webbroker accounts .our US , INTL ,& BOND funds are in the td e series funds.More of our investments are in the webbroker account but we directly own our canadian stocks.
fees on td e series funds are around 0.45 percent .yes i can get a better rate with another etf but most of our investments are in canadian companies we own.
it was easy for me to set up , i went in person to td at don mills & lawrence & the manager set up entire webbroker accounts.
Thanks for sharing Steve. Glad to read they were able to help you out. Most of the advisors at TD would never have even heard of the e-series.
Dale
For a commodities ETF – PRA.
The fund seeks to provide shareholders with exposure to a diversified portfolio of asset classes that are directly or indirectly linked to physical assets with positive correlation to inflation and are expected to maintain their real (after inflation) value over time. These assets may include precious metals and related equities; industrial, energy and agricultural commodities and related equities; real estate investment trusts (REITs); emerging market (EM) currencies; real return bonds and treasury inflation-protected securities (TIPS); and cash.
Thanks John, yes I’ve long suggested PRA as a one-stop shop for inflation fighters. It is a very good ETF. I like overweighting some oil and gas stocks as well – that’s the most reliable equity sector for inflation.
Dale