Mutual Funds: Understanding Common Fees and Terms

Use this blog post to help you learn about various fees and terms you may see when looking at a mutual fund investment. After you’ve looked at the content below, speak with a registered investment advisor for more information.

What is a Mutual Fund?

A mutual fund is a pool of money invested in securities for a large number of investors by a professional money manager and entitles you to redeem your units at the end of each trading day.

Mutual funds have been available to Canadian investors for more than 80 years, though they became more common in the 1980s and 1990s. Today, most banks and financial institutions offer mutual funds for purchase or funds can be purchased through an investment dealer.

Common Mutual Fund Fees and Terms

Back-end Load

Back-end loads are fees investors pay when they sell mutual fund shares. The fee is a percentage of the value of the share being sold.


A market or sector index against which you can measure the performance of an investment, such as a mutual fund.


Used when referring to stocks or mutual funds, categories help investors make meaningful comparisons between investments.

Front-end Load

Front-end loads are fees investors pay when a mutual fund is initially purchased. They decrease the size of the initial investment because front-end loads are deducted from the initial investment amount.

Fund Facts

Fund Facts are a document that highlights key information for an investor in a mutual fund, in language the investor can easily understand—including a description of the fund, the performance, risks, and costs of buying and owning the fund.

Investment Fund

An investment entity where money is pooled and invested in various assets. Each investor owns unit or shares of the fund. Investment funds include mutual funds and exchange-traded funds.

Management Expense Ratio (MER)

The management expense ratio, commonly abbreviated as MER, is the total of the management fee and operating expenses expressed as a percentage of the fund’s value. Funds show their MER as a percentage of the fund’s assets.

Money Market Fund

This is a mutual fund that invests in short-term fixed income securities.

Mutual Fund Dealer

A company that buys and sells the shares or units of mutual funds for investors.

Mutual Fund Unit

This term refers to part ownership in a mutual fund.

Net Asset Value

Net asset value is the value of all the assets of a mutual fund, less the fund’s liabilities.

Open-ended Mutual Fund

A type of mutual fund that does not limit the number of shares or units that can be issued by the fund.

Portfolio Manager

A person with greater educational qualifications than a dealer who is authorized to make discretionary trades for institutional investors and high net worth individuals. Also, a firm or individual who manages a mutual fund or collection of securities.


The Canadian Securities Administrators’ national electronic filing system for disclosure by public companies and mutual funds.

Short-term Trading Fee

A fee charged to investors when mutual fund shares are sold prior to the expiration of a hold period.

Trailer Fees

Commission paid by the fund company or other party to the investment dealer or advisor each year as long as the investor stays in the fund.

More Information on Mutual Funds

The Canadian Securities Administrators (CSA) have a downloadable document that describes mutual funds in more detail. Download the Understanding Mutual Funds report to learn more.

The Investment Funds page on InvestRight has more information on mutual funds, including a breakdown of types,  risk levels,  costs, and more.

If you’re interested in reading more common investment terms, visit the InvestRight glossary.

If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393 or through e-mail at [email protected] You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form. is the British Columbia Securities Commission’s investor education website.

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