Here's a shocker: it's not the markets dragging down your portfolio, it's all those pesky hidden fees.
A June 2015 report by Morningstar gave Canadian mutual funds a grade of D- on fees, meaning that Canadians pay the highest fees in the world. With 33% of Canadian households investing in mutual funds, this adds up to a failing grade for one-third of Canadian investors.
In the last year, an alternative to mutual funds has emerged. Online investment services match individual investors with a custom portfolio of low-cost ETFs (exchange-traded funds). ETFs are similar to mutual funds, except that they charge much lower fees.
With online investment services, the portfolio of ETFs is actively managed for you by professionals. Investors get the benefit of dramatically reduced fees as well as a portfolio manager who continuously monitors and adjusts the investments, just as a wealth manager would do.
To illustrate the impact of fees, Questrade Wealth Management recently began offering free portfolio assessments through its online investment service, Portfolio IQ. The service notes that an investor can save over 40% in annual management fees versus a typical global balanced mutual fund (one typical investment category for mutual funds).
