Our investment offerings incur a fee, known as a Management Expense Ratio (MER). The MER for a target date fund covers several key costs associated with managing the fund. Here’s why you pay an MER for a target date fund:
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Fund Management: The MER includes the fees paid to the fund managers who make investment decisions, allocate assets, and adjust the fund's strategy as it approaches the target date. This management is crucial for ensuring that the fund gradually becomes more conservative over time.
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Administrative Costs: The MER covers administrative expenses such as record-keeping, customer service, and maintaining the fund’s operations. These are necessary for the smooth functioning of the fund.
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Research and Analysis: Fund managers use research and analysis to make informed investment decisions. The MER helps cover the costs of this research, including market analysis and investment evaluation.
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Regulatory Compliance: Funds must comply with regulatory requirements, which involves legal and compliance costs. The MER helps cover these expenses to ensure the fund adheres to regulations.
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Performance Monitoring: The MER includes costs for ongoing monitoring of the fund’s performance and making adjustments to the asset allocation as needed to stay on track with the target date strategy.
The MER for a target date fund reflects the costs of professional management, administration, research, compliance, and distribution, all of which contribute to managing the fund effectively and helping you achieve your long-term investment goals.