Fees charged by mutual funds can play a big role in long-term returns.
The problem is that many of the investment firms charging low fees in funds also have too-high minimums for some investors. That is, of course, one way to keep fees low. There is less administration required for one investment of $25,000 than for 25 investments of $1,000. Another way to keep fees low is to pay no trailer fees to financial advisers or discount brokers who sell their funds.
Vancouver-based Leith Wheeler Investment Funds Ltd., which sells no-load funds directly to investors, said Wednesday it has chopped its $25,000-minimum per fund to $5,000 if it is purchased through a third party like a discount broker. Subsequent investments remain at $1,000.
Some of the institutions, including discount brokers, may charge a one-time service fee to buy the fund, says Karey Irwin, an investment adviser at Leith Wheeler. "That is why we tell clients to make sure they know if they are going to be paying extra charges."
Still, it may be worth paying a one-time service charge if you really want the no-load fund and to keep all your investments in one account at a brokerage firm.
Leith Wheeler, however, has no interest in paying trailer fees and increasing the management expense ratios (MERs) in its funds, Ms. Irwin stresses. "We think our fees are reasonable, and we think there are investors who are savvy enough to look for well-managed funds, and don't want to pay too much for it"
A $25,000 minimum per account remains for clients who wish to deal directly with Leith Wheeler. Its funds are sold in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. See Leith Wheeler funds on Globefund.