TD Ameritrade To Offer Commission-Free ETF Trading

by on October 10, 2010 | Updated October 20, 2010 | ETFs Mentioned:

As the ETF world continues to expand, more online brokerage houses are beginning to offer their clients commission-free trading on ETFs as a way to generate interest in these relatively new investment vehicles. Among the first firms to offer this program were Fidelity, which currently offers 26 commission-free iShares ETFs, Charles Schwab (11 ETFs), and Vanguard (62 ETFs in total). One popular online brokerage company that has been noticeably absent from this list is TD Ameritrade. which currently has over six million U.S. accounts under management. But now all that is changing.

While a few others may have beaten Ameritrade to the punch, the Omaha-based company is making up for lost time by offering a much wider-suite of commission-free ETF products to its clients. Ameritrade will be offering well over 100 ETFs– more than the other three combined– potentially generating a large amount of interest among small investors and RIAs. Furthermore, the company has managed to offer free-trades on products from a variety of issuers including; iShares, Vanguard, State Street, and PowerShares which should give investors plenty of choices to accomplish their investment objectives [also read Seven Tips To Keep Your ETF Expenses Low].

Product Lineup

While the majority of Ameritrade’s offering will consist of core portfolio holdings– such as the Vanguard Total Stock Market ETF (VTI) or the iShares S&P 500 Index Fund (IVV)– the commission-free list also does offer a wide variety of funds that target specific countries as well. These include ETFs tracking the Russian market such as RSX, the iShares MSCI Canada Index Fund (EWC), and the WisdomTree India Earnings Fund (EPI), providing investors with a nice mix of both developed and emerging market investment choices.

It is also important to note that the commission-free list doesn’t stop with equity ETFs, Ameritrade will also offer commission-free trading on popular commodity funds such as the PowerShares DB Commodity Index Fund (DBC) and even currency ETNs such as the iPath Optimized Currency Carry ETN (ICI). Clearly, investors will be able to build a diversified commission-free ETF portfolio by using the Ameritrade sanctioned funds.

However, this program does have one important stipulation: an investor who buys a fund and then sells it within 30-days will be charged a short-term trading fee. This ensures that long-term investors are the primary beneficiary of this program and that it doesn’t become a haven for short-term traders looking to freely move in and out of volatile products [also read The Total Cost Of ETF Investing].

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