Budget Beavers

ETF / Index Fund Comparison

Lifetime MER drag: see exactly how much the fee difference compounds to over 30 years.

For informational purposes only. Not financial advice. MER data from Vanguard Canada and iShares Canada product pages. Past performance is not indicative of future results.
Lifetime fees foregone vs cheapest option
$
0
eaten by fees over 30 years

Investment Scenario

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$
%

Funds to compare

Fund name MER %

MER data: Vanguard Canada / iShares Canada  ·  2025 2025 · Source: Vanguard Canada / iShares Canada

Results by Fund

Next step: Rebalancing after switching? → Couch Potato Rebalancer  ·  See the power of compounding → Compound Interest Calculator

Portfolio Growth by Fund

Watch the gap between a low-MER ETF and a high-MER mutual fund widen dramatically over time. That gap IS the fee drag compounding against you.

Lifetime Fees Foregone per Fund

Total return dollars silently redirected from your retirement to your fund manager. The mutual fund bar is not a mistake.

The math behind your result

Every number on this page is derived from the exact Canadian regulatory formula — not approximations or estimates. The calculation runs entirely in your browser using the inputs you provided. Expand the section below to verify the math step-by-step, or share the URL to reproduce these exact results.

▶ How is fee drag calculated?

Net annual return

Net return = Gross return − MER
Example: 7.00% gross − 2.20% MER = 4.80% net (bank fund)
         7.00% gross − 0.22% MER = 6.78% net (VEQT)

Fee-free baseline

FV(principal, contribution, grossReturn, years)
  = principal × (1+r)^N + contribution × ((1+r)^N − 1) / r
where r = (1 + grossReturn)^(1/12) − 1  (monthly geometric rate)

Fees foregone

Fees foregone = FV(grossReturn) − FV(grossReturn − MER)
This is NOT just MER × balance. It includes all the compound
growth those fee dollars would have earned — the "opportunity
cost of fees" that MER × balance understates by 5–10×.

Why MER × balance understates the real cost

If you pay $200 in fees this year, that $200 isn't just $200 gone — it's also the $200 × 1.07^remaining_years of compound growth that $200 would have produced for you. Over 30 years at 7%, every $1 of fees costs you ~$7.61 in final balance. The "fees foregone" number captures this compounding effect.

About the ETF Fee Comparison Calculator

Why MER matters more than most investors realize

The Management Expense Ratio (MER) is deducted from your fund's assets daily — you never write a cheque, which is exactly why it's so invisible. A 2.2% MER sounds small. Over 30 years on a growing portfolio, it can consume more than half the wealth you would have had.

The critical insight is that fees compound. Every dollar redirected to your fund manager stops earning returns for you. Over 30 years at 7%, a single dollar of fees today costs you approximately $7.61 in final balance. This is why the "fees foregone" number is so much larger than a naive MER × average_balance calculation.

Canadian ETF landscape (2025)

Canadian investors are fortunate to have access to low-cost, globally-diversified all-in-one ETFs like VEQT (Vanguard All-Equity, MER 0.22%) and XEQT (iShares All-Equity, MER 0.20%). These single-fund portfolios hold thousands of global equities and rebalance automatically. Their MERs are approximately 10× lower than the typical Canadian actively-managed mutual fund (average MER ~2.2%).

Why Canadian mutual fund MERs are so high

Canadian mutual funds carry some of the highest MERs in the developed world, partly due to embedded trailer fees (commissions paid to advisors from the MER, typically 1%) and the dominance of bank-owned fund companies. The Client Focused Reforms (CFR, effective 2021) improved disclosure but did not cap MERs. Many investors switching from advisor-sold mutual funds to self-directed ETF portfolios reduce their annual fee from 2–2.5% to under 0.25%.

What the fee odometer shows

The headline number — "fees foregone vs cheapest option" — is the difference in final portfolio balance between your most expensive fund and your cheapest fund. It answers: "How much more would you have had if you'd chosen the low-cost option from day one?" This is the number worth knowing before you invest.

Not financial advice. MER figures from Vanguard Canada and iShares Canada product pages as of 2025. Future returns are not guaranteed. All calculations happen in your browser — no data is sent to any server.

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