TD Ameritrade announced recently its offer to waive commission fees on 101 exchange-traded funds (ETFs) as long as the investor holds onto the fund for longer than one month.
The announcement coincided with the launch of the brokerage’s new online ETF Market Center. Retail and professional investors can both use the market center, which includes ETFs selected by investment consultants at Morningstar Associates.
“We want to help investors build long-term portfolios more cost effectively,” said Fred Tomczyk, president and chief executive officer of TD Ameritrade. “We have a very popular no-transaction fee mutual fund offering, and as ETFs continue to grow in popularity and diversity, this was a natural progression for us. It’s an incredible opportunity to help educate long-term investors about ETFs and portfolio diversification.”
TD Ameritrade’s standard commission fee is $9.99.
Keeping up With Competitors
TD Ameritrade‘s move toward commission-fee-free ETFs comes in the wake of similar actions by its top competitors. Brokerage firms such as Vanguard, Fidelity and Charles Schwab have done away with commission fees on some of their ETF offerings in the past year. The 101 ETFs customers can choose from include offerings from companies like iShares, Vanguard and State Street, among others. The lone stipulation to the deal — in addition to registering for an account at the ETF Market Center — is that you must hold the fund for 30 or more days before selling.
What’s an ETF?
ETFs are similar to mutual funds in that they are products made up of bundles of stocks and investments. ETFs can be traded a bit more freely than mutual funds can. You can trade an ETF like you would a stock: At any time during the day. ETF prices tend to fluctuate more than mutual fund values do, but they can also offer some tax benefits mutual funds don’t. The commission fees usually charged on any purchase or sale of an ETF might make mutual funds a more attractive investment. TD Ameritrade is hoping its selection of fee-free funds might convince investors to consider ETFs.