Brokers make many mutual funds available to their account holders without transaction fees. These no transaction fee (NTF) funds can be bought and sold without incurring trading costs. Exchange traded funds (ETFs) trade like stocks and most brokers charge a fee, either per share or per transaction, to buy and to sell a stock or an ETF, but commission-free ETFs are becoming more common.
Most brokers now offer no-fee ETFs, but the number and selection of these commission-free ETFs differs widely at each broker. Firstrade and Scottrade, for example, offer just 10 to 15 commission-free ETFs, respectively, while TD Ameritrade offers over 100. Schwab and Vanguard only allow investors to trade their own proprietary ETFs without trading fees, while TD Ameritrade offers ETFs from many popular providers such as iShares, Vanguard and SPDR.
TD Ameritrade and Etrade are the only brokers we know of that are imposing a redemption fee on these no-fee ETFs. If you sell a no-fee ETF within 30 days at TD Ameritrade, you’ll be charged $19.95. At Etrade, the fee varies from $15.99 to $19.99 based on how many stock trades an investor has made.
The table, below, gives a rundown of ETF trading costs at some popular brokers, as well as the number and type of commission-free ETFs available.
Broker |
Trading Cost(market & limit orders) |
Number of ‘No Fee’ ETFs |
| ETrade | $7.99 | 80 ETFs from DBX, Global X, WisdomTree* (as of December 2011) |
| Fidelity | $7.95 | 30 iShares ETFs |
| Firstrade | $6.95 | 10 ETFs including ETFs from iShares, Vanguard, PowerShares |
| Muriel Siebert | $14.95 up to 1,000 shares | None |
| Schwab | $8.95 | 13 Schwab ETFs |
| Scottrade | $7.00 | 15 Focus Morningstar ETFs |
| TD Ameritrade | $9.99 | 100+ free ETFs chosen by Morningstar, includes ETFs from iShares, SPDR, Vanguard.* |
| Vanguard | $7 for the first 25 trades, $20 for subsequent trades.** |
64 Vanguard ETFs |
*TD Ameritrade and Etrade impose a redemption fee on all commission-free ETFs held less than 30 days.
** Vanguard has lower fees for Voyager/Flagship members.
(This post was updated in December 2011 to include Etrade’s new commission-free ETFs. Before December 2011, Etrade did not have any ETFs available without trading costs.)