Frontier Model Portfolio Costs
The Frontier model portfolio annual product costs are shown below for their most recent reported year (2024). Each portfolio’s cost represents the weighted annual management expense ratio (MER) of its underlying component funds. A component fund’s MER is its annual cost expressed as a percentage of its assets.
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Frontier’s portfolio costs decline slightly as its stock weights rise because the portion of its bond model that is actively-managed - which automatically declines as the portfolios become more aggressive - is more expensive than its passive stock holdings. |
Cost Comparison
How do Frontier's portfolio costs compare to other portfolio programs?
The chart below compares Frontier’s portfolio costs to about 200 portfolio funds, that belong to about 40 similar portfolio programs offered through Canada and which currently represent about $500 billion of invested assets. The peer universe is described further here .
Because Frontier’s portfolios contain only Series F and equivalent funds, we compare their costs to the peer universe’s Series F funds. Peer universe costs are obtained from each fund’s Management Report on Fund Performance (MRFP), a regulatory document available from the fund company’s website and at SEDAR .
The chart below compares Frontier’s portfolio costs to about 200 portfolio funds, that belong to about 40 similar portfolio programs offered through Canada and which currently represent about $500 billion of invested assets. The peer universe is described further here .
Because Frontier’s portfolios contain only Series F and equivalent funds, we compare their costs to the peer universe’s Series F funds. Peer universe costs are obtained from each fund’s Management Report on Fund Performance (MRFP), a regulatory document available from the fund company’s website and at SEDAR .
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For each portfolio fund in the peer universe, the chart to the right plots its annual cost (“MER”) reported in 2024 on the vertical axis, against its 2024 year end stock ("equity") weight on the horizontal axis. The dotted line shows the estimated cost for a given stock weight, averaged across the various programs. Frontier’s portfolio costs, the large blue-and-white circles, lie well below the peer group average throughout the entire range. Frontier’s cost advantage is about 0.5% per year for its most conservative portfolio and rises to about 1% annually for its all-stock portfolio. Frontier’s sizeable cost advantage is due mainly to its use of passive investment vehicles for half of its bond holdings and for all of its stock holdings. |
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Understanding Investment Costs
Investment costs are charged mainly for two separate services: 1) client advisory, and 2) product management. An example of the latter is what a fund company charges to manage a mutual fund. Both types of costs are typically specified as a percentage of the investment assets managed.
Both types of costs can be charged and paid either directly or indirectly. When charged indirectly, they are taken out of the investment’s assets and lower its return commensurately.
In Canada, Series A and equivalent mutual funds charge both types of costs indirectly. The fund company initially retains part of the fund’s assets, keeps the product management portion for itself, and remits the client advisory portion (the “trailer fee”) to the client’s advisor’s company.
In contrast, Series F mutual funds charge only the product management cost and do not include a charge for client advisory services. An investor who uses Series F funds pays their advisor’s company directly for their advisory services.
Frontier Financial’s model portfolios contain only Series F and equivalent investment funds. Client advisory fees, which include Frontier’s compensation for its services, are negotiated separately and paid directly by the client to the advisory companies Frontier partners with, shown in the website’s Services section.
Both types of costs can be charged and paid either directly or indirectly. When charged indirectly, they are taken out of the investment’s assets and lower its return commensurately.
In Canada, Series A and equivalent mutual funds charge both types of costs indirectly. The fund company initially retains part of the fund’s assets, keeps the product management portion for itself, and remits the client advisory portion (the “trailer fee”) to the client’s advisor’s company.
In contrast, Series F mutual funds charge only the product management cost and do not include a charge for client advisory services. An investor who uses Series F funds pays their advisor’s company directly for their advisory services.
Frontier Financial’s model portfolios contain only Series F and equivalent investment funds. Client advisory fees, which include Frontier’s compensation for its services, are negotiated separately and paid directly by the client to the advisory companies Frontier partners with, shown in the website’s Services section.
