ETFs and mutual funds report their Management Expense Ratio (MER) semi-annually in their Management Report of Fund Performance (MRFP). The reported MER is the sum of the fund’s total management fees, total operating expenses, and sales tax for the last year, all divided by the fund’s average assets for the period. Management fees cover the costs of managing the funds, while operating expenses include costs for audits, accounting, legal fees, custodial services, valuations, and record-keeping. The MER has become a key metric by which investors assess investment products, but it can be misleading when funds alter their fees, as the MER is a trailing measure.
When a fund company releases an MRFP, it calculates the MER based on data from the past 12 months. If the fund decreases its management fee on the date when its MRFP reporting period ends, investors will not see the full fee reduction in the MER until one year later. If a fee change occurs before an MRFP is released, the report will show a mix of the old and new fees charged to the fund. This causes a delay between announcing fee reductions and when the posted MER fully reflects those changes.
Fortunately, investors can estimate an updated, forward-looking MER when fund fee reductions are announced. This involves examining the MER over a period when management fees remained unchanged, separating the management fees to estimate operating expenses and sales tax, and then adding those estimates to the new management fee. For example, the DFA Global 70EQ-30FI Portfolio (F) had a MER of 0.30% and a management fee of 0.23% in 2024-2025, which results in an estimated operating cost of 0.07%. According to the June 25th, 2025, press release, the fund’s management fee has been reduced to 0.22% as of July 1st, 2025. Therefore, the estimated MER going forward is 0.29%. Using the same method, we can estimate the forward-looking MERs for all Dimensional Global Portfolios based on the management fee reductions announced in July 2025.
| Dimensional Fund | Estimated Operating Costs + Sales Tax* | Management Fee as of July 1, 2025 | Forward-looking MER Estimate | Posted MER |
| DFA Global 70EQ-30FI Portfolio (F) | 0.07% | 0.22% | 0.29% | 0.30% |
| DFA Global 80EQ-20FI Portfolio (F) | 0.07% | 0.22% | 0.29% | 0.30% |
| DFA Global Equity Portfolio (F) | 0.06% | 0.22% | 0.28% | 0.29% |
* This figure represents the difference between the fund management fee and its MER over a reporting period where the management fee remained unchanged.
NB: The management fees for the DFA Global 40EQ-60FI, DFA Global 50EQ-50FI, and DFA Global 60EQ-40FI funds will remain unchanged in 2025; therefore, their posted MERs accurately represent their prospective MERs.
Source: PWL Capital, Dimensional Fund Advisors Canada.
