1. TD Ameritrade’s move means that Fidelity, Schwab and E-trade will be encouraged to react in some way and come out with a competing offer that’s just as attractive. Assets in the ETF industry are approaching $1 trillion, and TD Ameritrade has come out strong saying, “We’re worthy of grabbing your business.”
2. Retail investors and advisors now have no reason to not use ETFs in both large and small portfolios to achieve diversification and to do dollar-cost averaging. Smaller investors may finally be encouraged to use ETFs now as a result; Matt Krantz for USA Today points out that most large online brokers that offer free ETF trades require a $1,000 minimum to open an account. Other brokerages, such as Zecco, Wells Fargo and Bank of America, require a $25,000 minimum to open an account and qualify for a limited number of free trades. [How to Start Buying and Trading ETFs.]
3. It’s one more shot across the bow for poor-performing mutual funds. With TD Ameritrade’s new offerings, there’s even less reason to remain invested in mutual funds.
The ETFs offered on TD Ameritrade’s platform run the gamut, from core, plain-vanilla offerings like iShares S&P500 Index Fund (NYSEArca: IVV) and Vanguard Mid Cap (NYSEArca: VO) to commodities, with the PowerShares DB Oil (NYSEArca: DBO), and global funds, such as WisdomTree India Earnings (NYSEArca: EPI). You can find a complete list of all ETFs offered commission-free here.