New program offers 100 ETFs at zero-commission.
TD’s program is far more comprehensive than current offerings from other providers. Last year, Charles Schwab became the first major brokerage to offer zero-commission trading, waiving commissions for its family of Schwab ETFs; currently, Schwab offers 11 ETFs. Fidelity came next, striking a deal with iShares to offer 25 ETFs commission-free. Vanguard then waived commissions for brokerage customers who bought any of the 68 Vanguard-listed ETFs.
TD’s program breaks the mold by not aligning itself with any provider and by offering access to so many funds. The program includes a fairly comprehensive list of U.S. Equity, International Equity and Fixed-Income ETFs, with a smattering of commodities. Notably missing from the offering are gold bullion ETFs and sector funds. A complete list of the funds offered is available here .
The only platform that currently competes with the new TD model is Zecco, which offers commission-free trading in all equities and ETFs. Zecco does not have the extensive customer base of TD Ameritrade, however.
Commission-free trading programs are designed in part to make ETFs more palatable to individual investors, who can be dissuaded from investing in ETFs by commission costs. While ETFs often have lower expense ratios than competing mutual funds, those advantages can be overwhelmed by commission costs unless you are buying a large amount of an ETF. If you purchase $1,000 of an ETF, a commission of just $10 amounts to a full 1% of the purchase price. Commission-free programs put ETFs on-par with mutual funds in many ways.
The ETFs in the TD Ameritrade program were selected by Morningstar Associates, LLC, a registered investment advisor and unit of Morningstar.
The TD Ameritrade program has an important catch: An investor who buys a fund and then sells it within 30-days will be charged a short-term trading fee. The program is designed to help long-term investors access the ETF space.