I own Talvest Canadian Asset Allocation Fund and I see they charge a two per cent yearly management fee, yet the total fees charged are 2.61 per cent per year. Can you tell me what that extra 0.61 per cent is for?

 

Hamilton salesman Tom L., 52, is looking for growth from his $150,000 portfolio. He asks: “I own Talvest Canadian Asset Allocation Fund and I see they charge a two per cent yearly management fee, yet the total fees charged are 2.61 per cent per year. Can you tell me what that extra 0.61 per cent is for?”

This fund invests primarily in a balanced portfolio of Canadian equity and debt securities, including money market instruments and currently has assets of $511 million. The 2.61 per cent is called the MER (management expense ratio) which comprises the two per cent management fee and also what are called operating expenses which may include such things as banking, custodian and transfer fees, auditors and legal fees, brokerage fees, costs of preparing financial statements and prospectuses, taxes, unit holder servicing costs, the expenses of selling and distributing shares and regulatory fees.