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Mutual Fund FAQs

FAQs

Definitions

The Rule(s)

“The Rule(s)” refers to the Canadian Securities Administrators’ requirements that set out how mutual fund companies and order execution only (OEO) dealers like RBC Direct Investing are permitted to handle trailer-paying mutual funds that are held in client accounts after June 1, 2022, when the OEO trailer ban came into effect.

Dealer Rebates

Rebates represent the amount that is paid to a client by RBC Direct Investing, equal to the amount of the trailers that are paid by the applicable mutual fund company to RBC Direct Investing while the client holds a trailer-paying mutual fund in their RBC Direct Investing account on or after June 1, 2022.

Like-to-Like Switch

A like-to-like switch occurs when a mutual fund is switched from a trailer-paying class or series to a non-trailer paying class or series of the same fund, where the only difference is a lower management fee for the non-trailer paying class or series, and where there are no tax consequences for effecting this type of switch.

Like-to-Similar Switch

A like-to-similar switch occurs when a mutual fund is switched by the mutual fund company from a trailer paying class or series to a non-trailer paying class or series of the same fund, where the only differences are a lower management fee for the non-trailer paying class or series, and a difference in distribution policy and/or currency, and where there are no tax consequences for effecting this type of switch.

Management Fee Rebates

Rebates received by a client from the applicable mutual fund company, equal to the amount of the trailers that would otherwise be paid by the applicable mutual fund company to RBC Direct Investing while the client holds the trailer-paying mutual fund in their RBC Direct Investing account on or after June 1, 2022.

Trailing commission/Trailer

A trailing commission, or trailer, is an ongoing fee paid to an investment firm related to a client’s mutual fund holding by the mutual fund company and is part of a mutual fund’s management expense ratio (MER).

Prior Holding

Trailing commission paying mutual fund securities that were purchased by a client of RBC Direct Investing prior to June 1, 2022, and for which a like-to-like switch, a like-to similar switch and a management fee rebate are not available or cannot reasonably be executed.

Transfer

Transfer means a client-initiated transfer of trailer-paying mutual fund securities to RBC Direct Investing.

Grace Period

A period of up to 45 days from the date of a client transfer.

Mutual Fund Switches

Trailer-paying mutual funds that you held prior to June 1, 2022, were converted by the applicable mutual fund company to an equivalent fund that does not pay a trailing commission, where available. There was no action required on your part – the conversions were automatic and no commission was charged to you.

Any trailer-paying mutual fund that you held prior to June 1, 2022, was converted to an equivalent fund that does not pay a trailing commission, where available, in a process called a Like-to-Like Switch, which was effected by the applicable mutual fund company.

If there was no “like” fund that your trailer-paying fund can be switched to, your fund may have been converted to a similar fund that does not pay a trailing commission in a process called a Like-to-Similar Switch, which was effected by the applicable mutual fund company.

When a Like-for-Like Switch or Like-for-Similar Switch is effected, there was no action required on your part – the conversion was automatic and no commission was charged to you. The switch would have appeared on your account statement, sent to you by mail or available in PDF format under View & Manage Documents if you have selected eDocuments. A trade confirmation is issued when a mutual fund switch occurs. To check for a trade confirmation, log in to your account and select Transactions, then "View Activity" from the Trade & Transfer menu. The confirmation will appear on your Transaction History and includes important information like the name of the original trailer-paying fund that you held, the name of the non-trailer paying fund it was switched into, and the date of the switch.

In certain instances where a switch was not available or not effected, you may have been able to hold trailer-paying mutual funds in your account, where the applicable mutual fund company provides you with Management Fee Rebates.

Where a switch was not available or not effected and Management Fee Rebates are not used, you received Dealer Rebates from RBC Direct Investing.

If you transfer-in a mutual fund paying trailing commissions or subject to deferred sales charges, it can result in such securities being sold, returned without notice or switched into investment funds that do not pay trailing commissions in a “Like-to-Like” or “Like-to-Similar” switch, in order for RBC Direct Investing to comply with applicable Rule(s) within 45 days (the grace period) from the date of the transfer. A dealer rebate will be provided for any trailing commissions paid by a fund company manager to RBC Direct Investing during the grace period.

  • Any trailer-paying mutual fund that you transfer to RBC Direct Investing will be switched to an equivalent fund that does not pay a trailing commission, where available, in a process called a Like-to-Like Switch
  • If there is no “like” fund that your trailer-paying fund can be switched to, your fund may be converted to a similar fund that does not pay a trailing commission in a process called a Like-to-Similar Switch,
  • When a Like-for-Like Switch or Like-for-Similar Switch is effected, there is no action required on your part – the conversion is automatic and no commission is charged to you. The switch will appear on your account statement, sent to you by mail or available in PDF format under View & Manage Documents if you have selected eDocuments. A trade confirmation is issued when a mutual fund switch occurs. To check for a trade confirmation, log in to your account and select “Activity” from the My Portfolio menu. The confirmation will appear on your Transaction History and includes important information like the name of the original trailer-paying fund that you held, the name of the non-trailer paying fund it was switched into, and the date of the switch.
  • In certain instances where a switch was not available or not effected, you may be able to hold trailer-paying mutual funds in your account, where the applicable mutual fund company provides you with Management Fee Rebates.
  • Where a switch is not available or not effected and Management Fee Rebates are not used, you will receive Dealer Rebates from RBC Direct Investing.

Note that you will not be able to purchase more units of any trailer-paying mutual fund that you hold in your RBC Direct Investing account.

With the implementation of the OEO trailer ban, trailer-paying mutual funds should not be transferred to OEO dealer accounts; however, if transfers occur, RBC Direct Investing must adhere to the process described above in order to comply with the Rule(s).

A switch that is carried out as a Like-for-Like or Like-for-Similar Switch, as under the definitions laid out in the Rules, effects no tax consequences.

Please note, however, that RBC Direct Investing does not provide tax advice. You should discuss with a tax professional before you take any action on your own to buy, sell or switch your mutual fund holdings.

In the majority of cases, the switches will happen automatically, without action required or notification. Promptly after a switch, you will receive a trade confirmation which will set out the name of original trailer-paying fund that you held, the name of the non-trailer paying fund it was switched into, and the date of the switch. The switch will also appear on your next account statement, sent to you by mail or available in PDF format under View & Manage Documents if you have selected eDocuments.

You can find more information on the non-trailer-paying fund that your trailer-paying fund was switched into by reviewing the fund facts document (“Fund Facts”) of the particular class or series of the fund. The Fund Facts can be found on the SEDAR website at www.sedar.com(opens to external site) or on the website of the applicable mutual fund company. A Fund Facts will not be delivered to you unless you request it specifically.

If you hold a trailer-paying DSC fund that goes through an automatic switch before the fund’s redemption schedule has run its course, the automatic switch should not cause you to be charged any redemption fee. It is anticipated that mutual fund companies will waive any redemption fee that may be triggered by an automatic switch.

No, you will not be charged for any automatic switches effected by applicable mutual fund companies, nor for any Management Fee Rebates or Dealer Rebates provided to you as a result of you holding trailer-paying funds in your RBC Direct Investing accounts.

Note that if you choose to switch a fund on your own there may be tax consequences.

Mutual Fund Commissions

Effective June 16, 2025, RBC Direct Investing does not charge commissions to trade mutual funds.

High Interest Savings products are not subject to the trailing commission ban. As such, fees for these products are not changing. RBC Direct Investing will not charge a trade commission when HISA products are purchased on any of our platforms or over the phone with an Investment Services Representative.

No, there is no commission on reinvested distributions.

Management Fee Rebates and Dealer Rebates

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Management Fee Rebates will appear as an increase in the number of units of the applicable fund in your account. When a Management Fee Rebate has been provided to you by an applicable mutual fund company, it will be clearly identified on your Transactions page.

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When RBC Direct Investing has provided you with a Dealer Rebate, it will be clearly identified on your Transactions page, and will reflect on your account statement

There is no complicated calculation to determine the amount of Dealer Rebates paid. RBC Direct Investing will simply rebate you the amount of the trailer it is paid by the applicable mutual fund company in relation to the applicable trailer-paying fund holding. RBC Direct Investing will pay Dealer Rebates to you on at least a quarterly basis.

If you still need assistance, please contact us, or log in to your account to send a secure message.

Switch orders are only permitted within the same family of funds.
Mutual fund companies may assess additional fees – for example, deferred sales charges on back-end load funds (purchased before June 1, 2022), early redemption fees, setup fees and fees for insufficient funds on pre-authorized purchases.