In an effort to attract more mutual fund investors, Toronto-based Questrade Inc. has launched a new service that rebates mutual fund trailer fees to investors, the company announced on Wednesday.

The direct access brokerage, which lets Canadians trade in Canadian and American stock and options markets, is allowing online trading of mutual funds for the first time, and will give trailer fees back to clients with its new Mutual Fund Maximizer service.

“Canadians have long paid the highest fees in the world for mutual funds,” said Edward Kholodenko, president and CEO of Questrade.

All Questrade clients will be automatically enrolled in Mutual Fund Maximizer, which will rebate clients trailer fees — an average of 1% of their mutual fund investments annually. The rebates are not considered contributions in registered accounts, meaning any trailer fee refund is additional cash on top of the annual contribution limit.

The company also sharply reduced its commission for mutual fund trades to $9.95 a trade, from its prior commission of $30 for trades over the phone.

“Canadians have been hit extremely hard in the current economic downturn. Mutual funds are an important investment vehicle for many, so we decided to find a way to get Canadian investors a better deal,” said Kholodenko.

Questrade also launched a new mutual fund centre with research tools and online trading capabilities in its client portal.