Skip to main content

Cheapo investors and no-load ETFs just naturally go together.

In the mutual fund world, a no-load fund can be bought and sold with no commission fee paid to the adviser or firm selling it. The parallel for people using exchange-traded funds is an ETF bought through an online brokerage firm that waives trading commissions for ETFs. No-load mutual funds cost nothing to buy, and so do no-load ETFs.

I actually just coined the phrase no-load ETF, so don't ask brokerage firms about it. Simply enquire if they have a program allowing investors to trade ETFs without paying commissions that may run as little as $10 at some firms to as much as $29 or more. A few firms got into no-load ETFs a while back, but the trend has yet to widely catch on.

Story continues below advertisement

No-load ETFs have some appeal for all cost-conscious DIY investors, but beginners especially. That's because they're generally starting with next to nothing in assets. As a percentage of a $5,000 account, $120 in ETF buy commissions per year (that's $10 per month) amounts to a total commission cost of 2.4 per cent. That's way too expensive to be justified.

Let's look at some firms that offer no-load ETFs:

Qtrade Investor
They waive buy and sell commissions on 60 different ETFs from five different companies. Here's a list.

Questrade
You can buy any Canadian– or U.S.-listed ETF without a commission, and with no minimum holding period. You pay the regular cost when selling, which can be as low as $4.95.

Scotia iTrade
The only bank-owned firm to offer commission-free ETFs offers 50 options from four companies. Here's a list.

Virtual Brokers
You have two options with this firm, the first being a zero-commission program for buying all ETFs. Regular commissions, which are as cheap as a penny a share, apply to sales. The alternative is choosing from this list of ETFs that are completely commission-free.

Being able to buy ETFs at no cost doesn't mean you should create a complex portfolio based on many individual funds. Check out this low-cost three-pack of ETFs I wrote about recently. If bought on a no-load basis, they offer a fully diversified portfolio that will cost you very close to nothing.

Story continues below advertisement

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles as we switch to a new provider. We are behind schedule, but we are still working hard to bring you a new commenting system as soon as possible. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.