The way I see it, MERs play an important role in the return you get. But there are other factors as well, primarily where you stick your funds to grow.
You don’t say how old you are or what kind of tax sheltered accounts you have or whether or not you have any control over what funds you invest in. But unless you’re going to retire within 10 years or so, why do you have 20% of your money in fixed income?
Back to the low fees, I’m in the process of opening a custodial roth for my 6yo grandson, and I’m considering one of the zero fee funds from Fidelity. Yes, a 6yo can have a roth, because he can be paid for doing chores and that’s income. Just can’t go crazy with it of course LOL Fund Your Child’s Roth with Chore Income – Marotta On Money
As to your question, I’m not sure I follow because you’re telling us the “awful” fund has a MER of 2.25% and has done 5.5% over the last 5 years. And the good one has done 8.31% over the same time period. How do you mean the bad one is doing better?