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The Globe and Mail quick guide to cost-free ETF investing

The emergence of ETFs has forced many large asset managers to lower their mutual fund fees to stay competitive.

There's one small flaw in the argument that ETFs are the last word in low-cost investing.

Because they trade like stocks, investors must generally pay commissions to buy and sell exchange-traded funds. That means a charge of roughly $5 to $10 per transaction for mainstream investors, depending on which online brokerage firm they use. To deke around these costs, consult the Globe and Mail Quick Guide to Cutting Your ETF Trading Costs.

For investors who plan to invest in ETFs for the short term:

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If you're trading fairly actively, look for brokers with zero commissions for both buy and sell transactions:

-Scotia iTrade has a list of 50 ETFs you can buy or sell at no commission provided you hold for one business day and you execute the trade online or via its Tele-Trader service. As with all brokers listed here, Scotia offers ETFs from a variety of firms.

-Qtrade Investor has a list of 100 of ETFs you can buy and sell commission-free – to qualify you need to place a minimum order of $1,000, hold for at least one business day and be signed up to receive your documents electronically.

-National Bank Direct Brokerage offers zero buy and sell commissions on all Canadian ETFs, provided you trade at least 100 shares.

For investors who want to make regular purchases, say monthly or bi-weekly:

The profile here is an investor who is building a portfolio and concerned only with avoiding buy commissions. The following firms offer zero commissions for buying, but charge their usual fees for selling:

-Questrade lets customers buy any North American-listed ETF at no cost. ECN (electronic communications network) fees may apply for some purchases. In registered education savings plans, there's a flat $5 fee applied on any day you trade U.S. securities, including ETFs. The fee covers any number of trades on a given day.

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-Virtual Brokers offers Canadian and U.S. ETFs with no purchase commissions as long as you hold for a business day at least.

For investors who are particularly interested in U.S.-listed ETFs

Some firms with zero commission offers stick to Canadian funds. The ones that do U.S. funds as well are:

-Qtrade: A limited number of U.S. ETFs.

-Questrade: Any U.S. ETF

-Virtual Brokers: Any U.S. ETF

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About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998. Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More


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