Regulators looking for feedback on fund fees
TORONTO - Canada's securities regulators are looking into mutual fund fee structures, which have been the subject of debate in recent years.
The Canadian Securities Administrators said Thursday they have issued a discussion paper on the topic and are asking for public feedback. It examines the mutual fund structure in Canada and identifies potential investor protection issues with the aim of determining an appropriate structure.
Canada's mutual fund industry — which manages stocks, bonds and other types of investments for individual investors — has been under pressure to lower management expense ratios, or MERs.
The MERs, usually based on the value of the assets being managed by the funds, represent some of the built-in cost of operating the funds.
The umbrella group representing Canada's provincial and territorial securities regulators says while it has focused on enhancing transparency of fees and commissions it realizes the importance of consulting with market participants to explore any further issues.
"Mutual funds are a key investment in the portfolios of many Canadians," said Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission.
"It is important that we look at Canada’s mutual fund fee structure carefully in determining what changes could or should be considered to enhance investor protection and foster confidence in our market."
The CSA is asking for feedback on the paper. The comment period is open until Apr. 12.
In May, one of Canada's largest mutual fund companies said it would reduce the management fees it charge on many of its products.
Investors Group, which is part of IGM Financial (TSX:IGM) and the Power group of companies, said the reductions would affect about two-thirds of the funds it offers.