When it comes to fees, exchange traded funds provide investors a low-cost alternative to traditional fund products. Additionally, the industry has now partnered up with large brokerages to offer commission-free trades, cutting down the cost of investing in ETFs even further.
Among the largest firms, Fidelity Investments, TD Ameritrade, Charles Schwab, E*Trade, Vanguard and Merrill Lynch provide investors with access to commission-free trades on a number of ETFs, writes Timothy Strauts, ETF analyst at Morningstar. [A Closer Look at Commission-Free ETF Trading]
Fidelity expanded its partnership with BlackRock, increasing its line of commission-free trades to 65 ETFs from 30, including the new iShares “Core” series. Additionally, the brokerage includes the Fidelity Nasdaq Composite Index (ONEQ) . Overall, the funds have an average asset-weighted expense ratio of 0.25% and only 15% of the ETFs available have assets less than $100 million. [Fidelity, iShares Expand ETF Partnership: What Does it Mean?]
However, if a sale is executed within 30 days of purchase, investors will incur a short-term trading transaction of the regular commission fee of $7.95.
The TD Ameritrade platform offers a broad 101 commission-free ETFs from eight different sponsors, including iShares, Vanguard, State Street, PowerShares, WisdomTree, Market Vectors, PIMCO and iPath exchange traded notes. The average asset-weighted expense ratio is 0.20% and less than 1% of the ETFs have less than $100 million in assets.
Investors can find a number of commission-free trades on commodity-related ETFs. While the brokerage provides access to a number of large and popular ETFs, the SPDR S&P 500 (SPY) and SPDR Gold Shares (GLD) are not included. However, the iShares Core S&P 500 (IVV) is on the list.
If sales are executed within 30 days of purchase, investors will incur a short-term trading transactions of $19.99 – the regular commission on trades is $9.99.
Next page: More commission-free ETF platforms
- TD Ameritrade
- Fidelity Investments