Which of the following best differentiates a Series F mutual fund from a Series A mutual fund?

Question: Which of the following best differentiates a Series F mutual fund from a Series A mutual fund?

Answer options:

• Series F funds generally have higher MERs than Series A funds because they include embedded trailer fees. ✅ Series F funds are typically sold to clients who pay an advisory fee directly to their advisor, leading to a lower MER.
• Series F funds are exclusively available to institutional investors, while Series A funds are for retail investors.
• Series F funds have front-end sales charges, whereas Series A funds have deferred sales charges.

Correct answer: Series F funds are typically sold to clients who pay an advisory fee directly to their advisor, leading to a lower MER.

Explanation: Series F mutual funds are designed for investors who pay their advisor a fee directly (e.g., fee-based accounts). As such, the MER of a Series F fund does not include the embedded trailer fees that compensate the advisor, resulting in a lower MER compared to Series A funds, which do include such fees.