menu

Toronto Team  

 
Contact
  • T416.203.0067
  • 1.866.242.0203
  • F416.203.0544
  • 8 Wellington Street East
    3rd Floor
  • Toronto, Ontario M5E 1C5

ETF Commissions Are History

November 29, 2016 - 2 comments

When I first heard that National Bank Direct Brokerage (NBDB) was now offering commission-free trades on all Canadian ETFs, I was impressed. Questrade has been the fan favourite in this low-fee space for awhile now, but their commission-free deal only applied to ETF purchases (not sales).

After opening an account with NBDB and placing my initial ETF trades, I quickly realized I was still being charged commissions on a number of trades. I reviewed their website again, and noticed a little red star after one of their marketing pitches:

Source:  National Bank Direct Brokerage as of November 24, 2016

 

Turns out, you need to buy or sell at least 100 shares of an ETF in order to qualify for their commission-free ETF promotion. This is still a better deal than most of the big banks, but I couldn’t help feeling misled by their advertising.

Avoiding the $9.95 trading commission

As mentioned above, 100 shares of an ETF must be traded in order to qualify for zero commissions. ETFs with higher share prices will require a larger trade size to be eligible for zero commissions.  For example, you’ll need to buy or sell over $4,000 worth of the Vanguard U.S. Total Market Index ETF (VUN) in order to avoid the trading commission.  

I’ve included the approximate commission-free ETF dollar amounts in the chart below, to help you with your ETF choices.

Approximate Commission-Free Trading Amounts at NBDB

Asset Class Security Commisson-Free Amount
Canadian Bonds iShares Core High Quality Canadian Bond Index ETF (XQB) $2,122
Canadian Bonds Vanguard Canadian Aggregate Bond Index ETF (VAB) $2,618
Canadian Bonds BMO Aggregate Bond Index ETF (ZAG) $1,613
Canadian Stocks iShares Core S&P/TSX Capped Composite Index ETF (XIC) $2,345
Canadian Stocks Vanguard FTSE Canada All Cap Index ETF (VCN) 2,988
Canadian Stocks BMO S&P/TSX Capped Composite Index ETF (ZCN) 1,999
U.S. Stocks iShares Core S&P U.S. Total Market Index ETF (XUU) $2,190
U.S. Stocks Vanguard U.S. Total Market Index ETF (VUN) $4,081
U.S. Stocks BMO S&P 500 Index ETF (ZSP) $3,150
International Stocks iShares Core MSCI EAFE IMI Index ETF (XEF) $2,646
International Stocks Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) $2,433
International Stocks BMO MSCI EAFE Index ETF (ZEA) $1,634
Emerging Markets Stocks iShares Core MSCI Emerging Markets IMI Index ETF (XEC) $2,357
Emerging Markets Stocks Vanguard FTSE Emerging Markets All Cap Index ETF (VEE) $3,045
Emerging Markets Stocks BMO MSCI Emerging Markets Index ETF (ZEM) $1,751
Global ex Canada Stocks Vanguard FTSE Global All Cap ex Canada Index ETF (VXC) $3,039
Global ex Canada Stocks iShares Core MSCI All Country World ex Canada Index ETF (XAW) 2,118

Sources: BMO ETFs, BlackRock Canada, Vanguard Canada as of October 31, 2016

Avoiding the annual administration fee

NBDB also charges $100 plus tax if you don’t invest at least $20,000 with them (so this should be the recommended minimum starting point for any investor).

How to Build an ETF Portfolio at National Bank Direct Brokerage

For those investors who are eager to set-up an ETF portfolio at NBDB, I’ve included a tutorial below that will show you how to get started. In the video you’ll see examples of commission-free ETF trades (as well as the other kind). To reduce the number of trades, consider swapping out VUN, XEF and XEC for the iShares Core MSCI All Country World ex Canada Index ETF (XAW) – this would have resulted in zero-commissions payable for the initial portfolio set-up.

 

By: Justin Bender with 2 comments.
Comments
  16/01/2017 8:22:38 PM
Justin Bender
@Larry: If you have a modest-sized portfolio and are planning to place very small trades, Questrade is the most reasonably-priced for a DIY ETF investor. If you like the convenience of a bank brokerage, I prefer RBC Direct Investing (but the other brokerages all have their pros and cons).
 
  09/01/2017 3:08:45 PM
Larry
I see that you've listed a number of companies to do ETF trading with. Which company would you recommend (NBDB, TD, Questtrade, iScotia, RBC, etc.)?
 



 Security code