Mutual Funds have become a real point of contention in the media in the last few years. I recently watched a “CBC Market Place” report where a woman went to several financial institutions and asked “how do the fees with mutual funds work?”.

I was both shocked and amazed with how difficult this question was for these professionals to answer, and since then I’ve noticed from reading several articles and blog posts that these professionals and this client was not alone. To see the video - Click Here

So I would like to clear the fog and put it all out there.

First thing that is very important to understand is that Mutual Fund Fees are directly related to how investment advisors, and investment managers get paid. “How we get paid/Our business model” is really a conversation that needs to be had early in your financial advisor relationship. This should be done in your first meeting and be re-iterated in your letter of engagement.

It is also important to understand that depending on the structure of the financial advisors business model, there is a few different ways that you can be charged.

I will do my best to explain the most common ways mutual funds are set up. If you would like clarification, please don’t hesitate to ask.

Other versions – To keep things simple…I am going to share a few core examples. There are other structures out there that are derivatives of my examples that benefit different situations like non-registered money, and used often with higher value account sizes. To see a great further explanation on the variety of these structures- Click Here

There are two types of fees that can be associated with mutual funds – Sales Fees and Management Fees.

Let’s use a very simple example. You have decided that you want to invest your $100,000 in XYZ Equity Fund. Next step is to decide how this account will be managed based on the model of the advisor.

Mutual Fund Sales Fees

Now that we have decided on what you want to invest your $100,000 in, we now need to decide how to structure sales fees. Sales fees are directly related to how the advisor will get paid up front on the transaction.

Option 1 –Back End Load/ Deferred Sales Charge and Low Load (DSC, LL)

In the back end load structure, the fund company will pay the commission dollars to the advisor. The client will then have to pay a fee if they sell and withdraw your money from that fund company within a certain period of time. This varies from company to company, but let me give an example.

Back End Load – Sales Fee Schedule

So again…You have invested your $100,000 in XYZ Equity Fund, and if you decide to sell and pull your money out of the fund company you will have to pay a sales charge. If you removed your funds in year 5 for example the fee would be $4,000 (4% of $100,000). You can switch funds within the family without incurring fees. This means you could switch from XYZ Equity fund to XYZ Dividend Fund with no fee.

The rational for this fee is because when a purchase is made using the Back End Load structure the Fund Company pays a commission to the Investment Dealer of usually 5%. So the fund company says..

“We paid these people a commission for your business…If you decide to leave within a period of time, we want that commission back”

There is also something called ‘Low Load” which is the same concept but with a shorter time frame, and less fees. Here is an example of a Low Load Structure;

Low Load works the same way…The Fund Company pays the investment dealer a commission typically of 3% and if the client sells, they want to recoup that commission.

Option 2 – Front End Load (FEL)

Now you can also set up a Front End Load fee. In a front end load the advisor charges the client directly the commission up front typically anywhere from 0% - 5%. If you choose this method, the amount you deposit will be reduced by the fee amount.

For Example: If I charge a 3% FEL fee and you invest your $100,000 in XYZ Equity fund – You would only actually end up investing $97,000 (3% of $100,000).

In this structure there is no other fee if you sell and remove your money from the fund company. You paid the commission directly to the investment advisor, so the fund company will not need to recoup the commission.

Now…Not to add a level of confusion here…But there is one more component that works in the clients best interest if they have chosen the Back End or Low Load structure. Every year you are able to “Free Up 10%” of your fund units and move them to the Front End Load structure, thus eliminating any sales fees on those units.

Using our above example…After year 1 – You could take $10,000 out of back end load and hold the same investment in the front end load version. In year two you could move another 10%.

Mutual Fund Management Fees (MER)

Mutual Fund Management Fees are used to compensate the Fund Company, The Fund Manager, and the Investment Advisor on an ongoing basis for managing, and servicing your account/s.

Whether a client uses front end or back end structure there is typically a service fee or “trailer fee” paid to the advisor. The commission to the advisor is less for Back End Load then Front End Load and ranges from 0% - 1% paid to the dealer depending on the type of investment, Fund Company, etc.

Some of the services that are included in the MER’s range from company to company but in general are the following;

Mutual Fund Company Costs

- Administration Costs
- Trading Expenses
- Portfolio Manager compensation
- Reporting
- Etc.

Advisor Services

- Investment Advice
- Investment Due Diligence
- Tax Planning
- Financial Planning
- Estate Planning
- Retirement Planning
- Portfolio Management
- Economic Research
- Etc.

How MERs are calculated

The MER is calculated daily based on the value of your account.

The formula is - (Account Balance) x (MER) / 365 days

For example - $100,000 x 2%/365 = $5.48

Hypothetically if your manager generated the same return daily as your daily MER at the end of the year your MER cost for the year would be $2000.

This calculation is made daily. If your account drops in value – the fund company and investment advisors pay is dropped and conversely if your account goes up in value the commission increases.

When you look up a mutual fund most of the time performance numbers are posted after fees. So if you see that the mutual fund had an annual return of 8% and an MER of 2% - That means the annual return was 10% (-) 2% MER = 8% net return to the investor.

The MER does allow your fund manager and investment advisor to have a vested interest in the value of your account vs. just charging a flat fee for managing an account. The reason being, if your investment account drops by 50% than the compensation to the professionals also drops 50%.

There is a great calculator on Canada’s Investor Education Website “GetSmarterAboutMoney.ca” that allows you to choose a fund and see the impact. To see the calculator - Click Here

Performance Fees

Certain fund companies (typically Hedge Fund companies) will also charge what’s called a Performance Fee.

This performance fee is intended to further align the interests of the manager with the investor and allow a higher compensation for higher returns. The way a performance fee typically works is the following;

You pay a flat MER and the manager will charge a percentage of outperformance based on a certain benchmark. There is several different formulas for doing this but allow me to share a common example.

2 and 20 – One of the traditional formulas was to charge a flat 2% fee and then 20% of the outperformance of the index.

So let’s say the fund invested in US and Canadian Equities the benchmark might be a 50/50 mix of the S&P 500 and the TSX.

If the fund returned 15% and the blended index returned 10% - The fund companies MER would increase based on the additional 5% of return the company returned over 10%. In other words…they would charge your account a 20% fee on the additional 5% return.

There has been a lot of flak about mutual funds over the years and I can totally understand. A huge issue in this day and age is financial literacy, and quite frankly I don’t believe many investors are being educated about how these things work.

Mutual Funds are not for everybody, and further to that there is somewhere in the neighbourhood of 10,000 mutual funds in Canada most of which add no value to investors (adding performance or reducing risk). It is important to decide what makes the most sense for you, and determine if your Financial Planner/Financial Advisor is getting paid in a way that you feel comfortable with. If their compensation is all derived from mutual fund commissions, it is important that they are providing enough value to your relationship to justify the cost to you.

Again, in this post I have tried my best to keep things clean and simple. There are other derivatives of fund fees and compensation out there. Hopefully your advisor will discuss these different structures with you, especially when it is relevant and in your best interest to utilize. For more information visit this link - Click Here

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Infinite Financial is an independently owned and operated Financial Services company in Barrie, Ontario. We specialize in Life Insurance, Retirement Planning and Estate Planning.

Our Certified Financial Planners represent the major Banks, Investment, and Life Insurance companies in Canada. We pride ourselves in offering advice independent of any particular Life Insurance, Bank or Investment firm and based strictly on client’s needs.

Contact us today or stop by our office in Barrie to say Hello!

 
Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

 
I have always been very impressed with Ray Dalio's very simple and logical approach to markets.

Here are some more points I have learned from studying Ray and Bridgewater;

• Recognize that mistakes are good if they result in learning.
  
  
• Create a culture in which it is okay to fail but unacceptable not to identify, analyze, and learn from mistakes.
  
  
• We must bring mistakes in to the open and analyze them objectively, so managers need to foster a culture that makes this normal and penalizes suppressing or covering up mistakes - highlighting them, diagnosing them, thinking about what should be done differently in the future ans then adding that new knowledge to the procedures manual are all essential to our improvement at Bridgewater.
  
  
• Recognize that you will certainly make mistakes and have weaknesses; so will those around you and those who work for you. What matter is how you deal with them. If you treat mistakes as learning opportunities that can yield improvement if handled well, you will be excited by them.
  
  
• If you don't mind being wrong on the way to being right, you will learn a lot.
  
  
• People who blame bad outcomes on anyone or anything other than themselves are behaving in a way that is at variance with reality and subversive to their progress.
  
  
• In trading you have to be defensive and aggressive at the same time. If you are not aggressive you are not going to make money, and if you are not defensive, you are not going to keep money.
  
  
• If you add assets that have 0.60 correlation to the other assets, the risk will go down by about 15% as you add more assets, but that’s about it, even if you add a thousand assets.
  
  
• If you combine assets that have an average of zero correlation, then by the time you diversify to only 15 assets you can cut the volatility by 80%.
  
  
• I think it is human nature for people to choose strategies that worked well during the recent past. Typically high past returns simply mean that an asset has become more expensive and is a poorer, not better, investment.
  
  
• Correlation can be a misleading statistic and poorly suited as a tool for constructing a diversified portfolio.
  
  
• Instead of using correlation as a measure of dependence between two positions, you need to focus on the underlying drivers that are expected to affect those positions. Drivers are the cause; correlations are the consequence.
  
  Source: Jack D. Schwager - Hedge Fund Market Wizards
  
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  When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.
  
  Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

   The king hears about all the speculation and high prices and promptly sends his soldiers from town to town to proclaim that speculating is now a crime against the state-and that severe punishment is to befall speculators.

   The new law, like oh so many laws against the free market, only compounds the problem. Soon, some towns have no wheat at all-while rumor has it that others still have ample, even excess supplies.

The king keeps raising the penalty for speculation, while the price of wheat, if you can find any, keeps going higher and higher.

   One day, the court jester approaches the king and, in an entertaining sort of way, tells the king of a plan to end the famine-and to emerge as a wise and gracious ruler.

   The next day, the soldiers again ride from town to town, this time to proclaim the end of all laws against speculation-and to suggest that each town prominently post the local price for wheat at its central marketplace.

   The towns take the suggestion and post the prices. At first, the prices are suprisingly high in some towns and supprisingly low in others. During the next few days, the roads become virtual rivers of wheat as speculators rush to take profits where available. By the end of the week, the price of wheat is mostly the same everywhere and everyone has enough to eat.

   The court jester, having a keen sense for his own survival, makes sure all the credit goes directly to the king.

Hedge Fund Market Wizards - How Winning Traders Win
- Jack D Schwager

I came accross the above story while reading a book. I thought it was a great explination of how a market works. Whats interesting is that all markets work basically in the same way. Investment markets are not much different then the markets we visit to barter for goods.

Moral of the story, don't let day to day speculative scenarios or fear influence your decision.

As Warren Buffet says "In the short term the market is a voting machine, in the long term it is a weighing machine.

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

Speaking of prosperity, allow us to start with positive news...the Organization for Economic Co-operation and Development (OECD) predicts Canada will lead the G7 for the next half century with real gross domestic product growing by 2.2% on average annually.

Despite this bullish outlook for Canada, we are still heavily influenced by the economic activity of our largest trading partner, the US. This leads us to our two top growth strategies looking forward.

Putting aside fiscal cliff and other macro-issues that the US (among others) face, there are some extremely positive reasons to be selectively bullish on corporate America:

- US corporate profits are higher than they have ever been and make up the greatest percentage of US GDP than ever before; and
- Equity valuations as measured by the S&P 500 P/E ratio are currently below historical averages.

As commented on in previous newsletters, the US is in the midst of an energy and manufacturing renaissance and is expected to be the world’s largest oil producer by 2020, and is in the process of becoming a major natural gas exporter as a result of advancements in hydraulic fracturing leading to shale gas discoveries (source: Bloomberg).

At a recent industry meeting we attended, the well-respected author, Harvard professor, and historian Niall Ferguson summarized the US energy and manufacturing renaissance as:

“America Get’s Lucky Again”

We also note that according to the 11/12 edition of Scientific American, the US ranks first in all four innovation categories: Patents Issued, research papers published, R&D expenditures, and the number of science and engineering masters and doctoral degrees awarded.

We recommend two strategies for participating in this renaissance Universal American Growth, and Front Street Growth are managed by two very different, but well respected money management teams with excellent track records, and both offer large growth potential looking forward.

   Our recommended corporate bond portfolio was up over 10% last year and has been a valuable component of our Paid to Wait Strategy. For investors who are not entirely bullish on equity markets, paid to wait represents a diversified collection of yield producing assets with the intention of delivering a 6-7% net yield to the client.

Our paid to wait portfolios were positive on average approximately 9% last year. This was a combination of yield and capital appreciation. We continue to believe this is an excellent strategy for conservative investors who desire equity like returns but do not want 100% equity exposure.

Sentinel Strategic Income, Signature High Income/Diversified Yield, Clarington Tactical Income are examples of this strategy. For more on the Paid to Wait strategy click here.

Last year the average money market fund returned 0.56%. Bank of Montreal was the most generous with an average of .05%!! With interest rates at historic lows, conservative investors can hardly be excited about GIC returns, or traditional fixed income securities. Numerous options exist for risk averse investors who desire preservation of capital and/or income. 

   Over the past ten years, gold and precious metals has been one of the best performing asset classes. Eric Sprott of Sprott Asset Management believes silver will be one of the best performing asset classes over the next five to ten years. Historically the price ratio between gold and silver has been 16:1. Today the ratio is approximately 55:1. With gold trading at approximately $1,700 per ounce, this would suggest silver should be priced at approximately $100 per ounce. Silver presently trades at approximately $30 per ounce!! We offer various methods for purchasing silver bullion, or silver producing companies. For more on this theme see Why are (Smart) Investors Buying 50 Times More Physical Silver than Gold?  written by Eric Sprott

  House Keeping

- TFSA contribution amounts have been increased to $5,500 per year and can be an excellent complement to RRSP investing. For long term money we encourage clients to look beyond no interest (no advice) savings offered by the banks and consider a higher yielding strategy.

TFSA’s can be used as a simple, yet highly effective estate planning strategy for parents or grandparents looking to pass on assets in a tax efficient manner.

- March 1st is the deadline for RRSP contribution tax receipts to be used for 2012 tax returns. Please make cheques payable to Banwell Financial Inc. In-Trust, and we will confirm to you all received cheques.

We welcome any questions and/or concerns you may have about your investments and look forward to speaking with you either on the telephone or via email. Please feel free to request additional information on any of the above noted strategies.

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

In the last few years more and more people have been flocking out of stock/equity markets. Often when investors flock out of an investment class it presents the ideal time to start investing in that area, provided the investment class is sustainable.

Check out this interesting chart showing the flow of money out of the markets since 2008.

When people leave the markets they settle for more conservative or "Guaranteed" investments like Money Market Funds, GIC's or Government Bonds. The issue at hand is that these investments don't provide enough return to even keep pace with inflation. In a retirees case, this income is often not enough to keep pace with their lifestyle.

BUT...most people keep on investing in this way because they think that "The markets are too scary and they never make any money". 

So what do people get in return for being apprehensive? They get paid record low incomes on their investments.

Lets look at some real life examples of what the income from these investments will provide you.

Please note we have not included tax in the following examples:

In this case, an investor who puts forth $10,000 of their capital will earn enough money on his/her investment to purchase;

1) $32 trip to the movies.
2) $115 one month metro pass.
3) $194 enough to buy a few weeks groceries.

I personally like this example more!! Interest rates/Income providing rates havent always been at all time lows. This example shows us that;

- $150,000 invested in a 1yr GIC in 1991 would provide enough return to buy a 1991 Ford Escort.
- $150,000 invested in a 1yr GIC in 2011 would provide enough return to buy a used 1991 Ford Escort.

A simple solution 

Use Liability based investing. Invest your money depending on how you will need your capital.

• If we know we need money soon (1-3 yrs), we invest in short term liquid securities. 
  
  
• If we need money in a few years (3- 8yrs) we invest in investments that will offer a higher rate of return over this period of time. 
  
  
• If we have money that we won't need to see for 8 years+ then we can invest in longer term securities and not have to worry about what happens in the markets.

This solution basically places your investments in different baskets based on future liabilities. This approach allows you to shift your focus on how you think about investing in markets and taking risk with your money. Rather then putting all your money in something that will return very little because you are concerned about markets you can allocate your money to different investments based on when you will need the to use the money.

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

Here are some of Dans comments and points I took away from the breakfast;

- Right now the risk is the Fiscal Cliff. We are already feeling it. We will likely see a mini cliff.
- Housing in the US is growing to a million startups.
- Government bonds are expensive and offer little yield, but it is very hard to just leave them.
- Dan has outperformed the TSX by 8% over the last 6 months with 50% of the risk.
- Dans funds are always top decile and right now is 5th out of 500 funds.
- Dan is proactive in managing money stating - "I wan't to know what will go wrong, and how it will effect my investment thesis"
- "We cant just buy cheap stuff and hope they go up anymore. The next 5 - 10 years are going to be extremely rocky."
- China's economy is no longer growing at 8%.
- "The US growing at 1.7% is a bad number but they are in relatively good shape. Manufacturing is moving back, housing is improving, the auto sector is improving, and consumers are reloading."
- China is still a risk, we are still concerned. We don't look at goverments particularly, we look at things like electricity, automobile, and steel consumption.
- "Are high yield bonds in a bubble?...I don't think so. Yields are as low as ever. Real inflation is upwards of 8%. stocks may get you 9% but you have twice the risk and goverment bonds are negative. We see high yields have one of the best upside, with least amount of downside potential."

- Our Team: "We are stock and bond people and we get to know our companies really well. Part of our success has been buying stock in a companies bond we used to own or buying bonds in a companies stock we used to own."

- What we like: "Energy, we have been playing natural gas for the last 7 months. Companies like Enbridge and Trans Canada are clearly expensive but I get a 4%-5% dividend, 4% growth and these are still pretty solid companies. We think 80% of REITs are overvalued. We like auto companies like Magna and Bayner. We expect stocks to return around 7-8% next year and high yields to give us 8%. I still dont think we should get out of our high quality dividend paying stocks."

- "Goverment bonds are as overvalued as they have ever been and very risky."
- "Interest rates will not go up quickly. 200 years of data in government bonds tells us that it takes 15 years to go from peak to trough or vise versa"
- 50% of the S&P has a dividend yield higher than goverment bonds and the S&P 500 is the most diversified index globally.

To see the funds Dan currently manages click here

To watch videos produced by Dan about how he manages money and the funds he manages click here

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

"Throughout my investment career there has been 15 recessions. Each time, it feels like it will never end, and investors fly out of stocks."

"These actually present enormous opportunity to those who have a stomach to handle the fluctuations and buy great investments cheap."

"Never underestimate humans ability to innovate and solve problems."

I thought it would be timely to share the following piece...

 (note: In this piece, stock markets have been represented by DJIA which stands for "The Dow Jones Industrial Average")

What we see here is that every year from 1934 - 2011 there was a reason to be worried about markets and valid reasons "not to invest". Throughout this time the Dow Jones Industrial Average grew from 104 - 12218 a whoping 1071% increase.

Now, we still need to be smart about how we invest. We need to buy investments at reasonable prices, invest in industries that make sense, choose suitable investments given our age, time frame and risk tolerance.

Lets not kid yourself...Volatility is here to stay.

I will finish off with one last Buffet quote - "Be fearful when others are greedy and greedy when others are fearful."

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

Alot of people lose a lot of money investing. Many times the reason is because they let Mr. Market take advantage of them...

This story was written by father of value investing Benjamin Graham in his classic book "The Intelligent Investor" originally published in 1949. Many key concepts in investing are timeless. As investors we often get to emotionally involved when investing, and we can become our worst enemies. Mr. Market is still very alive today, and the majority of people let him get in their heads, and make silly decisions. Allow this example to offer a different perspective on how the market works.

The Story of Mr. Market

Imagine that in some private business you own a small share that cost you $1000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers either to buy you out, or to sell you an additional interest on that basis.

Sometimes his idea of value appears to plausible and justified by business developments and prospects as you know them. Often on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.

If you are a prudent investor or a sensible businessman, will you let Mr. Market’s daily communication determine your view of the value of a $1000 interest in the enterprise?

Only in case you agree with him, or in case you want to trade with him. You may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

The true investor is in that very position when he owns a listed common stock. He can take advantage of the daily market price or leave it alone, as dictated by his own judgment and inclination.

Benjamin Graham - The Intelligent Investor

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here

Mutual funds get alot of flack, and dont get me wrong they should there is a lot of terrible funds out there...

But dont kid yourself, there is also great money managers out there who can do a far better job than you, me, or most stock brokers out there. (dont believe me, come see me and I will prove it to you)

Which brings me to my Three M's of Mutual Funds, to help you figure out which ones make sense for you...

Manager - This in my opinion is most important. The manager is the captain of the ship, the idea guy/gal, the brains of the operation, the professional and who at the end of the day is managing your money. If you are going to get a specialized surgery, are you going to go online and get the easiest, quickest, cheapest surgeon on the market, or are you going to do your research and get the surgeon who has the best track record of long term performance, consistency, and sticks to what he knows?

Mandate - Mutual Funds have to follow certain protocol to be able to pass regulation. Every fund has a mandate of terms that it needs to follow. Some are very loose (manager can invest in anything but not have more than 10% in any one security). Some are tight (fund cant invest more than 10% in any one sector or outside Canada. I personally usually like the first one, but its important to find what matters most for you.

Motto - What is the overal investment firms values, and motto? Do we agree with it and are they going to stick around and continue to thrive? Every firm has beliefs, it is important that those align with yours, and of course they make sense in todays environment.

For a full blown guide on Mutual Funds click here

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When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

Infinite Financial places mutual fund transactions through Banwell Financial Inc. and Life Insurance transactions through Bridgeforce. To learn more about these relationships - click here