How much is too much? Nearly half of Canadians unsure what they're paying in mutual fund management fees

ING DIRECT survey points to alarming gap in investors' basic understanding of mutual fund investments, shortchanging their retirement plans

TORONTO, Jan. 24 /CNW/ - recent survey of Canadians by ING DIRECT finds many investors aren't aware of even the basic cost of holding mutual funds in their RRSPs. According to a recent Angus Reid Public Opinion poll commissioned by the bank, 45% of Canadians were unsure of the annual management expense they are paying for mutual funds. Furthermore, 28% were unable to even suggest what they considered to be a fair fee.

"It's concerning that Canadians are unaware of the high fees they pay for mutual funds, especially since these are the most popular investments in most retirement portfolios," said Peter Aceto, President and CEO, ING DIRECT Canada. "These high fees coupled with the typical performance of an actively managed mutual fund verses the benchmark index means many Canadians' retirement portfolios are being short changed."

However, the recent recession seems to have inspired Canadians to take a more active and informed role when it comes to investing. The survey found that in the aftermath of the recession, 39% of respondents are questioning whether they are invested in the right products, and nearly a quarter (24%) are looking for a simpler, more proven way to save for retirement.

A majority of respondents (58%) said that choosing a mutual fund for an RRSP was not as simple and straightforward as it could be, with 36% finding the process either frustrating or stressful. Simply not having enough time to educate themselves was the biggest obstacle cited when deciding which funds to choose. 

Aceto says that simplification and the ability to offer a product at a low cost were behind ING DIRECT's decision to settle on balanced, diversified index mutual funds as its sole mutual fund offering. In keeping with ING DIRECT's approach of creating straightforward financial products designed to save money, the Streetwise Funds® offer a balance of equities and bonds across four key indexes in one low cost fund. Lower fees mean more money stays invested to compound and grow, giving investors the potential to earn much more over time.

The Streetwise Funds track the following indexes: S&P/TSX 60 (Canadian Equities), S&P 500 (US Equities), DEX (Canadian Bonds) and MSCI EAFE (International Equities).

The Streetwise Balanced Fund® has a fixed asset allocation with 60% stocks and 40% bonds. For investors looking for more income the Streetwise Balanced Income Fund® has an allocation with 30% stocks and 70% bonds, and the Streetwise Balanced Growth Fund® has an allocation of 75% stocks and 25% bonds.

Aceto points out that similar to ING DIRECT's high-interest, no minimum Investment Savings Account, clients don't need a lot of money to get started. Automatic, regular contributions to the Streetwise Funds provide a simple way for clients to benefit from dollar-cost averaging. The commitment to invest a fixed amount of money regularly helps to decrease the overall cost of investing over time.

This strategy also helps reduce the risk of investing a large amount in a single investment at the wrong time. Although most funds allow clients to take advantage of dollar-cost averaging, it is difficult to find funds that offer this, plus broad diversification and low MERs in one package. The value of the Streetwise Funds is amplified by the ease of set-up and ability to invest on the go with ING DIRECT's mobile applications.

Survey Methodology
From December 14 to December 15, 2010, Angus Reid Public Opinion conducted an online survey among 1,062 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 3.1%, 19 times out of 20. The results have been statistically weighted according to the most current education, age, gender and region Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

About ING DIRECT
ING DIRECT is Canada's leading DIRECT bank with over 1.7 million Clients and more than $29 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 paid more than $4.5 billion in interest to Clients. ING DIRECT is open for banking 24 hours a day, 7 days a week, at ingdirect.ca, on mobile devices at m.ingdirect.ca or by calling 1-800 ING DIRECT (1-800-464-3473)

The Streetwise Funds are offered by ING DIRECT Asset Management Limited, a wholly owned subsidiary of ING Bank of Canada.  ING DIRECT Funds Limited is the principal distributor of The Streetwise Funds.

Commissions, trailing commissions and management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, unit values change frequently and past performance may not be repeated. The indicated rate of return is the historical annual compounded total return including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or taxes payable that would reduce returns. Mutual funds are not guaranteed. Values change frequently and past performance may not be repeated.

Follow Peter Aceto on Twitter at: Twitter.com/CEO_INGDIRECT
And find ING DIRECT at: Facebook.com/SuperStarSaver;
Twitter.com/SuperStarSaver; YouTube.com/SuperStarSaver

SOURCE ING DIRECT

For further information:

Lisa Naccarato, ING DIRECT
416-758-5072
lnaccarato@ingdirect.ca

Magda Jarota, MAVERICK
416-640-5525 x244
magdaj@maverickpr.com

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