ETFs That Should Be Commission Free But Aren’t

by on March 30, 2012

The evolution of the ETF industry has brought forth a host of strategies previously out of reach for mainstream investors. With over 1,400 products to choose from, investors can tap into an array of asset classes while enjoying the full benefits of the exchange-traded product structure such as ease of use, transparency, and enhanced tax efficiencies. Innovation has not only helped to expand the universe, but make it cheaper to access as well; investors can now trade several hundred ETFs commission free right from their brokerage account [see all Commission Free ETFs].

With everything from commission free emerging markets ETFs to bonds and commodity products, cost conscious investors have more than a handful of choices when it comes to building a low-cost portfolio [see Cheapskate ETFdb Portfolio]. Investors can click on any of the trading platforms listed below to see a full list of the commission free products available to respective account holders:

The roster of commission free ETFs is impressive by all means. Nonetheless, there are still a number of assets classes which do not fall under the commission free umbrella [see Six Noteworthy ETF Innovations]. Below we have listed several segments of the market which are not yet available, but should be, for commission free trading:

  • Gold: It’s a bit baffling that there is not a single commission free gold ETF considering the sheer popularity of the precious metal among traders and investors alike. Investors looking to jump into the metal while keeping an eye on expenses need not look any further than IAU, as this is the cheapest gold ETF on the market.
  • MLPs: This asset class has gathered some serious interest from investors looking to beef up their portfolio’s current return. However, despite the growing popularity of MLPs, there are currently no commission free products offering exposure to this corner of the market; YMLP charges the lowest expense ratio among MLP ETPs.
  • SPY: It’s quite surprising that the State Street SPDR S&P 500 ETF, the biggest and one of the most popular products on the market, is not available for commission free trading on any of the major brokerage platforms. However, there are several other commission free ETFs which offer comparable exposure to SPY, including IVV which tracks the same index.
  • Preferred Stock: Enhancing your portfolio’s current return while minimizing volatility is no easy task, which is why some cost conscious investors might be disappointed to find out that there are no commission free preferred stock ETFs available. This asset class has gained popularity thanks to its potential to improve risk-adjusted returns, which is why it’s surprising to see that the only preferred stock offering available commission free is the Canada Preferred ETF (CNPF).

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.