ETF / Index Fund Comparison
Lifetime MER drag: see exactly how much the fee difference compounds to over 30 years.
Investment Scenario
Funds to compare
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MER data: Vanguard Canada / iShares Canada · 2025 2025 · Source: Vanguard Canada / iShares Canada
Results by Fund
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.
Related calculators
- Couch Potato Rebalancer — once you've picked your ETFs, rebalance to your target allocation.
- Compound Interest Calculator — the power of compound growth over time.
- TFSA vs RRSP — hold your low-MER ETFs in the right account type.
Frequently asked questions
What is MER and why does a small percentage cost so much?
MER (Management Expense Ratio) is deducted from your fund's assets daily, so you never see a bill — which is exactly why it's so easy to underestimate. On the default scenario on this page ($10,000 start, $500/month, 7% gross return, 30 years), switching from a typical Canadian bank mutual fund to the cheapest ETF option saves roughly $214,000 in fees foregone. A 2.2% MER sounds small next to a 0.20-0.22% MER, but over three decades it can consume more than half the wealth you would otherwise have had.
How does the calculator model "fee drag" — is it just MER times my balance?
No — that would understate the real cost. This tool computes fees foregone as the fee-free future value minus the fee-paid future value: feesForegone = FV(grossReturn) − FV(grossReturn − MER). That captures the compound growth those fee dollars would otherwise have earned, not just the fee itself. Over 30 years at a 7% gross return, every $1 taken in fees today costs you approximately $7.61 in final balance — which is why "fees foregone" is so much larger than a naive MER × average-balance estimate.
How do low-cost Canadian ETFs like VEQT and XEQT compare to bank mutual funds?
VEQT (Vanguard All-Equity) carries a 0.22% MER and XEQT (iShares All-Equity) carries a 0.20% MER — both are single-fund, globally-diversified portfolios that rebalance automatically. The typical Canadian actively-managed bank mutual fund charges an average MER of around 2.2%, roughly 10x higher. Investors who switch from advisor-sold mutual funds to self-directed ETF portfolios often cut their annual fee from the 2-2.5% range down to under 0.25%.
Why are Canadian mutual fund fees so much higher than ETF fees?
Canadian mutual funds carry some of the highest MERs in the developed world, partly because of embedded trailer fees (commissions paid to advisors out of the MER, typically around 1%) and the dominance of bank-owned fund companies. The Client Focused Reforms (CFR), effective 2021, improved fee disclosure but did not cap MERs, so the gap between bank mutual funds and low-cost ETFs remains large.
What does the "lifetime fees foregone" number on this page actually measure?
It is the difference in projected final portfolio balance between your most expensive fund and your cheapest fund, given the investment amount, monthly contribution, gross return, and time horizon you enter. In other words: how much more you would have ended up with if you had chosen the low-cost option from day one. Adjust the inputs and fund table to see the number recalculate for your own numbers.