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Management Fees within a Mutual Fund or an Exchange Traded Fund

Management Fee is the amount paid to the fund manager, which is generally expressed as a percentage of the fund’s net assets. Management Fee is included in the Management Expense Ratio disclosed by a Mutual Fund and an Exchange Traded Fund.

Management Fees may also include a trailing commission paid to an advisor’s firm that sold the fund and is meant to cover the cost of advice to the client. In order to reduce the client’s total cost of owning a portfolio of funds, Invisor does not use the series of funds that pays out trailing commissions to advisers. Invisor believes that use of funds with trailing commissions introduces a significant conflict of interest which biases an advisor’s approach to selecting funds for a portfolio.

Management Expense Ratio (MER)

MER is a measure of the total costs of operating a fund as a percentage of the average total assets of the fund. This is the annual cost an investor bears for investing in the fund. An MER is generally divided into 2 main parts: (i) Management Fee paid to the firm that manages the fund; and (ii) operating expenses incurred by the fund such as record-keeping, fund valuation costs, audit and legal fees, and costs of sending out prospectuses & annual reports. The MER also includes the harmonized sales tax.

MER is an element of cost that impacts the performance of the fund. In seeking to minimize our client’s total cost of owning a fund, Invisor pays specific attention to the MER of a fund in selecting funds for inclusion in client portfolios.

Trading Expense Ratio (TER)

TER is a measure of the fund’s total trading costs as a percentage of the average total assets of the fund. This is a cost that the investor bears for investing in the fund, which depends on the amount of trading conducted by the manager of the fund.

TER is an element of cost that impacts the performance of the fund. In seeking to minimize our client’s total cost of owning a fund, Invisor pays specific attention to the TER of a fund in selecting funds for inclusion in client portfolios.

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