An investor decides to purchase 500 units of a Series F fund. The stated MER is 1.25%, and the advisor charges a separate annual fee of 0.75% of assets under management. If the investor had chosen a comparable Series A fund with an MER of 2.25% (including a 0.50% trailing commission), how much more, in percentage terms, would the Series A fund's MER effectively cost the investor compared to the Series F fund plus the advisor fee?

Question: An investor decides to purchase 500 units of a Series F fund. The stated MER is 1.25%, and the advisor charges a separate annual fee of 0.75% of assets under management. If the investor had chosen a comparable Series A fund with an MER of 2.25% (including a 0.50% trailing commission), how much more, in percentage terms, would the Series A fund's MER effectively cost the investor compared to the Series F fund plus the advisor fee?

Answer options: ✅ 0.25%

• 0.50%
• 0.75%
• 1.00%

Correct answer: 0.25%

Explanation: The total cost for the Series F investor is the fund MER plus the advisor fee: 1.25% + 0.75% = 2.00%. The Series A fund's MER is 2.25%. Therefore, the Series A fund's MER would effectively cost the investor 2.25% - 2.00% = 0.25% more. Note that the trailing commission of 0.50% within the Series A MER is already accounted for in the 2.25%.