Online brokers have made it easier and cheaper than ever to traded exchange traded funds (ETFs), and investors are responding.
Once upon a time, you could rack up hefty commissions on otherwise low-cost ETFs. Dollar-cost averaging didn’t make sense. And you had to keep track of those commissions to ensure they weren’t going Pac-Man on your returns. [ETF Fees: How Low Can They Go?]
Those days are more or less over. To wit:
- Charles Schwab has begun offering no-commission trading in their own ETFs and slashed the cost of trading other ETFs on their platform.
- Fidelity offers commission-free online trading on 25 iShares products.
- Vanguard offers free trades on their 46 ETFs, while other ETFs traded on their platform have commissions ranging from $2 to $7.
- TD Ameritrade most recently stepped up to the plate, offering free trades on 101 ETFs covering the major asset classes and sectors.
Brokers say that the reduced costs of owning and trading ETFs has had the desired effect: they’re being used more, says Tova Cohen for Reuters. Some brokers are also banking on traders doing other business on their platforms, such as trading stocks or utilizing various services.
Deborah Fuhr, Barclays Global ETF Head, says that she expects the ETF growth rate to reach 20% to 30% by the end of this year – and those low costs are playing no small part in that. [Free ETF Trades: Always A Good Thing?]
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.