One of my pet peeves as a financial planner is high management fees or MER's (Management Expense Ratios) on mutual funds, especially mediocre mutual funds. This hurts my client's portfolios and takes away from achieving their goals. Canada has some of the highest fees on mutual funds in the developed world and for the most part they are unnecessarily high. Most investors do not understand that the management expense ratio directly takes away from their return and that if a fund has a high fee structure then there will always be a headwind on their potential returns.
A cursory analysis finds that out of the 3783 mutual funds in Canada, 424 have a MER of 3.0% or higher, and 1470 have a MER of 2.5% or higher. There is virtually no reason why a MER should be over 3% and a MER over 2.5% should be looked at with some critical eyes. Granted, some funds have a performance fee added in to the MER but this represents very few of these 424 funds over 3%. The major culprits for high fees are "Investors Group", "Stone & Co", and most of the novelty international sector funds of all the other major fund companies, including CI, Trimark, Fidelity, AGF, Dynamic, etc.. A management fee of over 3% is intolerable in my opinion and actually anything over 2% should be rationalized and value should be shown with long term out-performance. The trouble with most of these high fee culprits is long term UNDER-PERFORMANCE.
High Management Fees on Mutual Funds get the big gong from me for keeping Canadian investors poorer than necessary and for unfairly padding the pockets of investment advisors and mutual fund companies.