Get The Down Low On Series D Mutual Funds

Attention do-it-yourself investors: the slick next generation of the Series D has arrived.

If the above sentence reads like complete gibberish or sounds like a new car launch to you, then you’re in the right place.

A New Type Of Mutual Fund

While discounted mutual funds have been available from low-fee fund firms like Phillips, Hager & North and Beutel Goodman for a while now, RBC has recently added "Series D" funds from Invesco, BlackRock and Mackenzie.

Translation: if you have investor wits and don’t care much for advice but still want an actively managed mutual funds, Series D mutual funds might be your bag.

In an attempt to wrap our head around how the Series D funds work, we chatted with Doug Coulter, president of RBC Global Asset Management Inc. Here’s what he had to say:

MW: What is a Series D or discount mutual fund?

DC: Series D is designed specifically for self-directed investors who would like to benefit from the professional investment management offered by mutual funds, but wish to do the investment research and decision making themselves.

Series D is available to clients with a minimum of $500 to invest per mutual fund, per account, and a subsequent investment minimum of $25. Series D units are available on over 100 RBC Funds, PH&N Funds and BlueBay Funds across a variety of asset classes and investment styles, corporate class funds and currency-hedged options, enabling investors to build well-diversified portfolios.

MW: How do they work?

DC: Series D works the same as any other mutual fund series.

The main difference is the pricing: Series D charges a lower management fee because there is no advice component that an investor would pay when investing through an advisor. Thus, Series D units are suitable for self-directed investors who want to invest in actively managed funds and enjoy the cost savings associated with making their own decisions.

Series D can typically be purchased through discount brokerages (such as RBC Direct Investing) or through PH&N Investment Services.

MW: What's the purpose behind Series D and how does a series D differ from other mutual fund series?

Series D will appeal to the do-it-yourself investor who is looking for lower-cost, actively managed mutual funds, without an advice component.

From our perspective, Series D supports investor choice.  For many investors, a full-service advice model makes sense.  For many others, a self-directed model is appropriate, and Series D enables investors to make that choice and invest accordingly.

Canadians today have a range of options available to them when investing in mutual funds, depending on the type of access, service and advice that suits their needs. We support that choice.

Series D rewards do-it-yourself investors for managing their own investments.

MW: What type of investor would want to avoid these funds?

Investors who are looking for access to investment professionals, advice on portfolio construction and buy-and-sell recommendations or services like budgeting and retirement planning may prefer to deal with a full-service advisor who can provide these and many other services. In this case, a more traditional mutual fund solution (which would include a fee for advice as part of the fund’s management fee) would make sense.

The choice is in the hands of investors, where we believe it belongs.