Mutual funds still most commonly held retirement investment despite high
fees - but there are ways to turn those fees into savings
TORONTO, Feb. 9 /CNW/ - Many Canadians are not changing their savings
habits despite the current financial crisis, according to a recent Angus Reid
poll. The survey, commissioned by ING DIRECT, found that more than half of
Canadians (55%) plan to contribute approximately the same amount to their 2008
RSP versus last year, while 30% said they would contribute less.
According to the survey, mutual funds are the most commonly held
investment for retirement savings and Canadians are not planning to change
their reliance on these funds, despite the fees that eat away at their
investments. This could be because most investors are not aware of the
long-term costs associated with investing in mutual funds. Indeed, the survey
found that while most Canadians are aware that they are charged fees for their
mutual funds (80%), half of them don't know how much they are paying to hold
these investments or the impact of these fees on long-term savings potential.
Further, while Canadians have taken steps in recent months to re-evaluate
their financial decisions by consulting with advisors and paying closer
attention to market swings, the survey found that only eight per cent have
taken the initiative to become more knowledgeable about the fees they pay.
"We want Canadians to know there are many opportunities to save more
money and the easiest way to do this is by taking control of their own
portfolios," said Peter Aceto, President & CEO, ING DIRECT. "Saving doesn't
need to be complicated and you don't have to pay to get advice on how or where
to save - especially when we've learned it doesn't guarantee better returns.
Investing some time to learn about how fees impact a portfolio and how easy it
is to find low-cost investment options can help people increase the value of
their savings today and significantly over the long term."
The survey results indicate an opportunity for Canadians to become more
aware of the fees associated with their funds, and how they might be able to
lower them. Although approximately half of Canadians did not know how much
they paid in fees for their funds, those who did know claimed to pay about
2.5% in fees on average. Some funds have lower fees, such as the index-based
ING DIRECT Streetwise Funds which charge a 1% management expense ratio (MER).
The average Canadian balanced fund charges a 2.6% MER. Simple math shows
that contributing $10,000 per year for 10 years at a return of 6%, will save
an investor about $10,000 in fees and generate approximately $12,000 more in
total growth with a fund that charges a 1% MER verses the average 2.6%.
The survey also revealed that Canadians' investment choices, knowledge
and behaviour varies greatly across the country.
- Mutual funds are owned by more Canadians in their RSPs than any other
financial product (88%). The three most popular products used for
retirement savings after mutual funds are GIC's (23%), individual
stocks (21%) and money market funds (21%).
- Western Canadians own more mutual funds than other regions in Canada
(51% vs. 39% nationally).
- In Quebec, bonds are more popular retirement investments in
comparison with Ontario, the West and Atlantic Canada (33% vs. 10%
- Western Canadians bought the most mutual funds over the past six
months (27%) while Atlantic Canadians bought the least (15%) of all
- When asked about investment behaviour in light of the current
downturn, Ontario residents said they are less likely to contact a
financial advisor with respect to their investments than other
provinces (67% vs. 80% nationally).
- Only 15% of Canadians surveyed know the average fee charged by fund
companies to hold mutual funds. Those in Ontario were most
knowledgeable (19%), while Quebeckers were least knowledgeable (8%).
- Seventy-five per cent of those surveyed indicated they currently have
a financial planner or investment advisor. Of these respondents, 7%
intend to switch their primary financial advisor or do more investing
on their own (11%).
- When asked about financial advisors given the market downturn,
Atlantic Canadians said they are the most likely to keep their
primary financial advisor (88%) while Westerners are least likely to
keep their advisor (77%).
- Seventeen per cent of those aged 55+ expect to retire later than
planned due to the recent downturn while 30% of those aged 35-54
indicated retiring later than planned.
From November 21, 2008 to November 27, 2008, Angus Reid Strategies
conducted an online survey among a randomly selected, representative sample of
1,004 adult Canadians through the Angus Reid Forum. The margin of error for
the total sample is +/- 3.1%, 19 times out of 20. The results have been
statistically weighted according to Statistics Canada's most current
education, age, gender and region Census data to ensure a representative
sample of the entire adult population of Canada. Discrepancies in or between
totals are due to rounding
About ING DIRECT
ING DIRECT is Canada's largest direct bank with over 1.6 million Clients
and more than $23 billion in total assets. ING DIRECT gives the power of
saving to all Canadians by offering high-value, simple products such as high
interest savings accounts with no fees or service charges and low rates on
mortgages. Low cost, index-based mutual funds are sold through ING DIRECT
Funds Limited. ING DIRECT has been operating in Canada since 1997, and since
that time Clients have earned more than $3 billion in interest. Clients can
bank with ING DIRECT 24 hours a day, 7 days a week, at www.ingdirect.ca or by
calling 1-800 ING DIRECT.
About ING DIRECT Funds Limited
Mutual funds are offered by ING DIRECT Funds Limited, a wholly-owned
subsidiary of ING Bank of Canada. ING DIRECT Funds Limited offers mutual funds
across Canada except in Quebec and the Territories.
About ING DIRECT Asset Management Limited
ING DIRECT Asset Management Limited, a wholly owned subsidiary of ING
DIRECT, is the manager of the ING DIRECT Streetwise Funds.
For further information:
For further information: or to arrange an interview, please contact:
Lisa Naccarato, ING DIRECT, Office: (416) 758-5072, Mobile: (416) 885-0348,
firstname.lastname@example.org; Lynnette Visaya, ING DIRECT, Office: (416) 758-5544,